Credit notes, debit notes and refunds
Correct a posted invoice or bill with a note, and pay a credit back to the customer as a controlled refund.
Before you begin
- A note is raised against a posted invoice (credit note) or bill (debit note). Drafts are edited instead.
- You need billing.manage, and document.invoice to post the note.
- If correction reasons exist, you need to choose one.
Steps: raise a credit note
- Open the posted invoice from Billing > Customers > Invoices.
- Press Credit note.
- Choose the Reason and enter an Explanation (up to 1,000 characters).
- Confirm. A draft credit note opens, against the original, with every line in full at the original tax rate and code.
- Press Post. If the reason Needs approval, send it for approval first (Approve an invoice before posting).
For a vendor bill, Credit note on the bill creates a debit note against it.
Example: invoice 1,000.00 plus VAT 50.00 = 1,050.00. A whole credit note posts as: debit revenue 1,000.00, debit output VAT 50.00, credit receivable 1,050.00. A partial credit of 2 units out of 10 at AED 100.00 gives a note of 200.00 plus VAT 10.00 = 210.00. Partial credits by line and quantity are available through the system interface; the screen dialog credits the whole invoice.
What the system checks
- 'A note is raised against a posted invoice or bill.' You tried a draft.
- A note cannot exceed what was invoiced less earlier notes. After a credit of 8 of 10 units, a credit of 3 more is refused (2 left).
- 'A note cannot be dated before INV/...'
- 'Choose the correction reason for this note.' once any reason is active.
- 'The reason <CODE> needs the original invoice on the note.' for a reason that must name the original.
- 'The reason <CODE> allows notes up to 20% of INV/...; this note would exceed it.' when the reason has a cap. With a 20% cap on an invoice of 1,050.00, the cap is 210.00; after a note of 105.00 a second of 126.00 would total 231.00 and is refused.
Steps: refund a credit
A refund pays a credit note back to the customer. The feature Refunds must be on.
- Open the posted credit note.
- Press Refund. The dialog is titled "Refund the credit".
- Enter the Amount, up to what is left to refund, the Method (Bank transfer, Cash, Card reversal, Cheque) and the Reason.
- Confirm. The refund is Requested and the note shows Left to refund.
A different person with billing.refund.approve then:
- Opens Billing > Customers > Refunds.
- Presses Approve, or Refuse with a reason.
After the money is paid in Accounting:
- Press Mark paid on the approved refund.
- Enter the Payment reference (up to 80 characters), for example
BANK-TRF-0001.
The refund is Paid and the reference appears in the Payment column. Billing does not post the payment; it is made in Accounting.
Example: a credit note of 1,050.00 with nothing applied. A refund of 500.00 leaves 550.00 to refund. If 400.00 of the note was applied to an invoice, the most you can refund is 650.00; asking for 700.00 is refused: 'Only 650.00 of CN/... is left to refund.' A refused refund makes the amount refundable again.
What happens next
The Corrections tab and Billing > Reporting > Correction chain show original, note and refund together.
Good to know
- Refund approval is separate: 'Somebody other than the person who prepared this refund must decide it.' Because the approval step also needs billing.manage, give the approver both rights.
- Wrong-state actions are refused: 'Only a requested refund is decided.' and 'Only an approved refund is paid.'
- The screen has no button to cancel a requested refund yet; refuse it instead.
- Refund amount must be above zero: 'The refund must be more than zero.'
- A posted invoice that has receipts can be reversed only after the receipts are reversed. A reversal shows Reversed on the billing record.
- Wrong invoice? See Credit and rebill.