Credit & Debit Notes

Credit notes and debit notes are essential documents for handling returns, refunds, and corrections in your sales and purchase transactions. This guide explains when and how to use them.

What Are Credit Notes?

A credit note is a document issued to customers when they return goods or when you need to provide a refund or adjustment. It reduces the amount the customer owes you and serves as a formal record of the credit applied to their account.

What Are Debit Notes?

A debit note is a document issued to vendors when you return goods or need to record an adjustment to a purchase. It reduces the amount you owe the vendor and documents the credit you are claiming from them.

Credit Notes

When to Use Credit Notes

Use credit notes when:

  • A customer returns goods and you need to issue a refund or credit their account.
  • You discover an overcharge on an invoice and need to correct it.
  • Goods were damaged in transit and you are crediting the customer.
  • You are applying a discount or adjustment after the invoice was issued.

How to Create a Credit Note

Go to Credit Notes
From the Inventory app, open the Credit Notes section from the sidebar or menu.
Click Create Credit Note
Click the "Create" or "New Credit Note" button to open the credit note form.
Fill in the Details
Select the customer, optionally link to an invoice, add the date, line items, and reason. See the field table below for details.
Save and Issue
Review the credit note and save. You can print or send it to the customer. Stock will be adjusted automatically if items are returned.

Credit Note Fields

Field Description
Customer Required The customer who is receiving the credit. Select from your customer list.
Invoice Reference Optional The original invoice this credit note relates to. Linking helps with reconciliation and audit trails.
Date Required The date the credit note is issued. Defaults to today.
Items Required Line items being credited. Add item, quantity, unit price, and tax. Quantities can be partial.
Reason Optional Brief description of why the credit is being issued (e.g., "Returned goods", "Price correction").

Credit Note List

The credit notes list shows all credit notes you have created. Use filters and search to find specific notes.

Credit Note List Columns
Note #
Unique reference number for the credit note. Auto-generated or manually set based on your numbering sequence.
Customer
The customer who received the credit. Click to view customer details.
Date
The issue date of the credit note.
Invoice Ref
The linked invoice number, if any. Helps trace the credit back to the original sale.
Amount
Total credit amount including tax. Shown in your company currency.
Status
Current status such as Draft, Issued, Applied, or Voided.

Debit Notes

When to Use Debit Notes

Use debit notes when:

  • You return goods to a vendor and need to record the credit from them.
  • You discover an overcharge on a purchase bill and need to claim a refund.
  • Goods received were defective or incorrect and you are returning them.
  • You need to document an adjustment to a vendor bill.

How to Create a Debit Note

Go to Debit Notes
From the Inventory app, open the Debit Notes section from the sidebar or menu.
Click Create Debit Note
Click the "Create" or "New Debit Note" button to open the debit note form.
Fill in the Details
Select the vendor, optionally link to a bill, add the date, line items, and reason. See the field table below for details.
Save and Issue
Review the debit note and save. You can send it to the vendor. Stock will be reduced if items are being returned.

Debit Note Fields

Field Description
Vendor Required The vendor from whom you are claiming the credit. Select from your vendor list.
Bill Reference Optional The original purchase bill this debit note relates to. Linking helps with reconciliation.
Date Required The date the debit note is issued. Defaults to today.
Items Required Line items being debited. Add item, quantity, unit price, and tax. Quantities can be partial.
Reason Optional Brief description of why the debit is being issued (e.g., "Returned goods", "Defective items").

Debit Note List

The debit notes list shows all debit notes you have created. Use filters and search to find specific notes.

Debit Note List Columns
Note #
Unique reference number for the debit note. Auto-generated or manually set based on your numbering sequence.
Vendor
The vendor from whom you are claiming the credit. Click to view vendor details.
Date
The issue date of the debit note.
Bill Ref
The linked purchase bill number, if any. Helps trace the debit back to the original purchase.
Amount
Total debit amount including tax. Shown in your company currency.
Status
Current status such as Draft, Issued, Applied, or Voided.

How Credit and Debit Notes Affect Stock

When you create a credit note for returned goods, stock is increased in the relevant warehouse. When you create a debit note for goods returned to a vendor, stock is decreased. This keeps your inventory levels accurate without manual adjustments.

For credit and debit notes that do not involve physical goods (e.g., price corrections, service credits), stock is not affected.

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