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Every business aims to deliver the best service as often as possible but, no matter how hard you try, mistakes can be made. Yet, the way you react to a mistake is vitally important. This is your chance to show you are professional and fair – every customer will forgive an honest mistake if the right effort is made to ‘put it right’.

 

Credit notes are a way of you doing just that and putting right a mistake.

 

Credit notes: What you need to know

 

A credit note is, essentially, a negative invoice. It’s a way of you reducing all or part of the money owed to you by a customer – or of offering them money off a future purchase with your business. The format of a credit note should, in most respects, be identical to that of the invoices you issue to customers.

 

When should you issue a credit note?

It might be appropriate to issue a credit note if:

  • You didn’t supply a full order to your customer
  • All or part of the product or service you supplied was below the appropriate standard
  • You overcharged your customer by sending an invoice for too much
  • You issued an invoice by mistake

 

Offering to do this should help to win over a customer – and should help you to sort any unpaid invoices that are being disputed.

 

Your credit notes must include the same information as a VAT invoice, including:

 

  • Why it was issued
  • The total being credited, excluding VAT
  • The date and number on the original VAT invoice you issued

 

Creating a credit note

 

With KashFlow, credit notes are simple to create. Just create an invoice or receipt for a negative amount.

Then, when you print an invoice containing a negative amount, the heading will automatically change from ‘Invoice’ to ‘Credit Note’.

See how KashFlow works with your business and your books