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’.