Credit note

Last updated: 2026-10-31 · Docmoor

A credit note reduces the amount a customer owes, for example after a return, discount or billing error. It should reference the original invoice and explain the reason.

What a credit note should include

  • A unique credit note number and the date
  • The customer's name and address
  • A reference to the original invoice number and date
  • The reason for the credit
  • The amount being credited, including VAT where applicable
  • Your business details and VAT number if VAT registered

Credit note vs refund

A credit note adjusts the accounting record; a refund returns money. You may issue a credit note and then refund the customer, or offset the credit against future invoices. Keep both records clear.

Related tools and guides

Frequently asked questions

Do I need to issue a credit note for a refund?

It is good practice to issue a credit note when you refund or reduce a charge, especially for VAT records. It links the adjustment to the original invoice.

Can a credit note have a negative amount?

Many systems show credits as positive amounts labelled as a credit. The important thing is that the document clearly identifies the adjustment and the original invoice.

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