A Credit Note is a document prepared and issued by a business to a customer and records a reduction in the amount previously charged to the customer on its invoices. Credit notes can be required for a variety of reasons:
- After an invoice was issued, some of the goods were returned by the customer
- An invoice is issued but some or all of the goods charged for were not received by the customer
- An invoice was issued but the goods charged for turned out to be of a lower quality than were ordered but the customer accepted them anyway on the condition that a price reduction was made
- An invoice was issued that failed to take into account a discount that the customer was entitled to
A credit note is therefore the opposite of an invoice and therefore records similar information to an invoice including:
- Name and contact details of both supplier and customer (including the customer reference number)
- The supplier’s VAT registration number
- The date of the credit note
- A unique credit note number
- The associated returns note number and invoice number should also be included
- Details of the reason why the credit note has been issued should be included
- For example, the credit note might specify the goods that have been returned together with the amounts that are being credited
