Credit Note Template
A credit note (or credit memo) is issued to reduce the amount a client owes, either partially or fully. This template references the original invoice, includes the adjustment reason, and handles tax recalculation automatically. Essential for proper accounting when issuing refunds, correcting errors, or applying discounts after invoicing.
What This Template Includes
- Credit note number
- Original invoice reference
- Reason for credit
- Credit amount
- Tax adjustment
- Net balance
How to Create Your Credit Note
- 1
Describe your work
Type a plain English description of the services you provided, the client, and the amount.
- 2
AI generates your invoice
InvoiceQuickly's AI fills in all fields with industry-specific formatting, tax calculations, and proper payment terms.
- 3
Review, download, and send
Check the details, download as PDF, and send directly to your client via email or a payment link.
Recommended Payment Terms
Credit notes are typically applied to outstanding balances or future invoices. If no outstanding balance exists, the credited amount should be refunded within 14-30 days.
Need help writing payment terms? Read our guide to invoice payment terms for best practices and templates.
Tax Information
Credit notes affect your tax obligations — they reduce the VAT/GST collected on the original transaction. Ensure credit notes are included in your tax return for the period they're issued. Keep credit notes linked to original invoices for audit purposes.
Invoicing Tips
- 1Always reference the original invoice number on the credit note
- 2Include a clear reason for the credit (error, return, discount, cancellation)
- 3Never modify or delete the original invoice — always issue a credit note instead
- 4Use sequential credit note numbers separate from your invoice numbering
Related Resources
Frequently Asked Questions
When should I issue a credit note?
Issue a credit note when: goods are returned, you overcharged a client, you need to apply a post-sale discount, services weren't delivered as agreed, or there was an error on the original invoice. Never alter the original invoice directly.
What's the difference between a credit note and a refund?
A credit note reduces the amount owed — it can be applied to future invoices or result in a refund payment. A refund is the actual return of money. A credit note is the accounting document; a refund is the cash transaction.
How does a credit note affect VAT/tax?
A credit note reduces your VAT/GST liability for the period. If you collected £100 in VAT on the original invoice and issue a full credit note, you reduce your VAT liability by £100 on your next return.