Business Terms Dictionary

Credit Notes

Credit notes are commercial documents used to correct an original invoice, add any missing information, or indicate returned goods. We use them because the law doesn’t allow changes to an invoice once it’s issued — we have to create a credit note to make any updates or add missing details.

When can we use Credit Notes?


You might send or get a credit note for different reasons, but they're usually made because of a:

  • Order cancellation
  • Damaged items
  • Mistake on the invoice
  • Overpayment or double payment
  • Only part of the order delivered
  • Fewer products or services provided
  • Refund requested
  • Full or partial return


Example


For example, in a business transaction to indicate a reduction in the amount owed by a customer if he returns a damaged good.



Why are Credit Notes important in business?


Credit notes aren’t just paperwork, they play a key role in keeping your business running smoothly. Help you to:

  • Stay compliant as they fix invoice errors or returns. It keeps your tax and accounting records accurate.
  • Build trust and show transparency. They help avoid confusion or disputes with customers.
  • Adjust your income and expenses, so your numbers reflect reality.
  • Handling returns or corrections professionally shows customers you care. And that keeps them coming back.


How does Forge Flow help you?



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Forge Flow makes it simple. You can create a credit note from the customers menu or directly from the original invoice. And once you enter the reason for the credit, the system gives you two options:

  1. Reverse: It creates a draft with all the products from the invoice. You can then remove everything except the damaged items.
  2. Reverse and create a new invoice: It cancels the full invoice and lets you create a new one with only the correct products.