Credit & Debit Notes

Credit notes and debit notes are adjustment documents used to correct or modify previously issued invoices. A credit note reduces the amount a customer owes (linked to a sales invoice), while a debit note reduces the amount you owe a supplier (linked to a purchase invoice).

Credit Notes

Accessing Credit Notes

Navigate to Dashboard > Accounting > Invoices > Credit Notes. This opens the credit notes list page.

Credit Note Statuses

Status	Badge Color	Description
Draft	Gray	A newly created credit note that has not been approved. Can be voided.
Approved	Blue	The credit note has been reviewed and approved. It can now be applied to the customer's balance.
Applied	Green	The credit note has been applied -- the customer's balance has been adjusted and a treasury transaction may have been created.
Voided	Red	The credit note has been cancelled. It no longer has any financial effect.

Creating a Credit Note

Open the Create Dialog

On the Credit Notes list page, click the Create Credit Note button. A dialog window opens.

Select a Sales Invoice

The first field asks you to select the sales invoice that this credit note relates to. Choose the relevant invoice from the dropdown. This links the credit note to the original sale.

Add Items

Add one or more items to the credit note. Each item has:

Field	Description
Product Name	The name of the product being credited.
Quantity	The number of units being credited/returned.
Unit Price	The price per unit for the credit.
Tax Rate	The applicable tax rate percentage for this item.

Enter a Reason

Provide a reason for the credit note in the text field (e.g., "Defective goods returned", "Pricing error on original invoice").

Submit

Click Create to save the credit note. It will be created with a "Draft" status.

Credit Note Actions

The actions available depend on the credit note's current status:

Current Status	Available Actions	Description
Draft	Approve	Approves the credit note, changing its status to "Approved".
Draft	Void	Cancels the credit note. Status changes to "Voided".
Approved	Apply	Applies the credit to the customer's balance. A dialog asks you to select a bank account from which the refund will be processed. Status changes to "Applied".
Approved	Void	Cancels the approved credit note before it is applied. Status changes to "Voided".

Info: When you Apply a credit note, the system creates a treasury transaction in the selected bank account and adjusts the customer's outstanding balance on the linked invoice.

Applying a Credit Note

Click Apply

On an approved credit note, click the Apply button.

Select a Bank Account

A dialog appears asking you to choose the bank account for processing the refund/credit. Select the appropriate account from the dropdown.

Confirm

Click Apply to finalize. The credit note status changes to "Applied" and the financial records are updated.

Debit Notes

Accessing Debit Notes

Navigate to Dashboard > Accounting > Invoices > Debit Notes. This opens the debit notes list page.

Debit Note Statuses

Debit notes use the same status workflow as credit notes:

Status	Badge Color	Description
Draft	Gray	Newly created, awaiting approval.
Approved	Blue	Approved and ready to be applied.
Applied	Green	Applied to the supplier's balance.
Voided	Red	Cancelled with no financial effect.

Creating a Debit Note

Open the Create Dialog

On the Debit Notes list page, click the Create Debit Note button.

Select a Purchase Invoice

Choose the purchase invoice that this debit note relates to. This links the debit note to the original purchase.

Add Items

Add items to the debit note with the same fields as credit notes:

Field	Description
Product Name	The name of the product.
Quantity	The number of units being debited/returned.
Unit Price	The price per unit.
Tax Rate	The applicable tax rate percentage.

Enter a Reason

Provide a reason for the debit note (e.g., "Goods returned to supplier", "Overcharge on original invoice").

Submit

Click Create to save. The debit note is created with "Draft" status.

Debit Note Actions

Current Status	Available Actions	Description
Draft	Approve	Approves the debit note.
Draft	Void	Cancels the debit note.
Approved	Apply	Applies the debit to the supplier's balance, with bank account selection.
Approved	Void	Cancels the debit note before application.

Credit Notes vs. Debit Notes

Aspect	Credit Note	Debit Note
Direction	You credit the customer (they owe you less)	You debit the supplier (they owe you, or you owe them less)
Linked To	Sales Invoice	Purchase Invoice
Common Use Cases	Customer returns, pricing errors, service credits	Supplier returns, overcharges, damaged goods
Financial Effect	Reduces accounts receivable	Reduces accounts payable
When Applied	Refund issued to customer via bank account	Adjustment to supplier balance via bank account

Common Use Cases

Customer Returns a Product

1. Go to the original sales invoice and use Create Return (from the invoice detail page), or
2. Create a credit note manually linked to the sales invoice.

Supplier Overcharged You

1. Create a debit note linked to the purchase invoice.
2. Add the items with the price difference.
3. Approve and apply the debit note.

Price Adjustment After Invoice

1. Create a credit note (for sales) or debit note (for purchases).
2. Add items with the adjusted quantity and the price difference.
3. Follow the approve-and-apply workflow.

Warning: Once a credit note or debit note is Applied, it cannot be reversed. Make sure all details are correct before applying. If you need to reverse an applied credit/debit, you will need to create a new offsetting entry.