Credit Notes

For: People using the software to create and manage credit notes (sales returns or adjustments)

Purpose: Understand what the Credit Note module does and how it helps your business

What This Module Does

A credit note is a document that records credit you give to a customer, for example when they return goods or when you adjust an invoice. The credit note has a total and an available balance (the amount still available to use). You can apply that balance to one or more invoices to reduce what the customer owes. When the type is Goods Return, the system can add stock back to your warehouse (and reverse that when you cancel or delete the credit note). You can also refund part or all of the available balance to the customer (money paid back from your bank); refunds reduce the available balance and can be deleted to put the amount back on the credit note.

The Credit Note module lets you:

• Create and edit credit notes (when the status allows).
• Create a credit note linked to an invoice (customer and branch taken from the invoice) or standalone (you choose customer, branch, and shipping address).
• Choose type: Goods Return (items returned; stock is added to the warehouse) or Goods Rejection (no stock effect).
• Apply the credit note to one or more invoices (amount per invoice); the invoice balance and the customer’s outstanding balance are reduced.
• Remove one invoice from the applications (unapply that amount).
• Change status (e.g. Draft → Open, or Cancel); only allowed transitions are accepted.
• Refund part or all of the available balance (deduct from your bank, reduce available balance).
• Delete a refund (put the amount back on the credit note and back in the bank).
• Delete a credit note (only when status allows; reversals for applications, customer balance, and stock are done first).

Main Features (What You Can Do)

1. Create a New Credit Note

When you create a credit note you typically enter:

• Customer: who the credit is for. You can create from an invoice (provide the invoice; the system uses that invoice’s customer and branch) or standalone (you choose customer and branch). The customer must have the selected branch (the system adds it if missing).
• Branch, division, and warehouse: where the credit note is raised and (for Goods Return) where stock will be added.
• Shipping address: the customer’s main shipping address or one of their additional addresses. The system checks that this address belongs to the selected customer.
• Type: Goods Return (items returned; stock is added to the selected warehouse and batches are created) or Goods Rejection (no stock effect).
• Items: for Goods Return or Goods Rejection: products, quantities, rates, and amounts.
• Credit note date, reference, subject, customer notes, terms and conditions, and total amount.
• Attachments: you can upload files. These are stored securely and shown with the credit note.

Create from invoice

• If you provide an invoice (by invoice id or invoice number), the system uses that invoice’s customer and branch. The shipping address you provide must still belong to that customer. Creating the credit note reduces the customer’s branch current balance by the credit note total (the customer effectively “owes less” by that amount).

Create standalone

• If you do not link an invoice, you enter customer, branch, and shipping address. The same address check applies. The customer’s branch current balance is reduced by the credit note total so that the credit is reflected in their outstanding balance.

Goods Return and stock

• If the type is Goods Return, the system adds the item quantities to the selected warehouse when you save. It creates or updates batches (batch number, quantity, rate). This keeps inventory in sync with returned goods. Goods Rejection does not change stock.

2. View and Search Credit Notes

You can list credit notes with:

• Date: a single credit note date or a date range (from–to).
• Branch and division: filter by one or more branches or divisions.
• Status: e.g. Draft, Open, Partially Used, Used, Closed, Cancelled.
• Customer: filter by customer.
• Search: by credit note number, reference, or customer name (display name). The list shows only credit notes that match your filters and search.

The list is paginated. For each credit note you can see customer, branch, division, warehouse, total, available balance, status, who added or last updated it, and items.

3. Open a Credit Note (Full Details)

When you open one credit note, the system shows:

• Header: credit note number, customer, branch, division, warehouse, credit note date, type, status, total, available balance.
• Customer: name, code, phone, company name, and address details.
• Items: each line with item name, quantity, rate, amount, and (for Goods Return) batch details.
• Shipping address: the address used for this credit note.
• Bank details: primary bank (if set for your company).
• Invoices applied: list of invoices to which this credit has been applied, with invoice number and amount applied per invoice.
• Refunds: list of refunds (refund amount, date, bank, reference, notes) so you can see how much has been refunded.
• Attachments: list of attached files.

4. Edit a Credit Note

You can edit a credit note only when its status is Draft. Once the credit note is Open, Partially Used, Used, Closed, or Cancelled, the system does not allow editing.

When you edit a Draft credit note:

• You can change customer, branch, division, warehouse, shipping address, type (Goods Return / Goods Rejection), items, total, and attachments.
• The system checks again that the customer has the selected branch and that the shipping address belongs to the customer.
• Total cannot be set lower than the amount already applied to invoices (if any). If you increase the total, available balance is updated (total minus applied amount).
• Type and items:
• If you change from non–Goods Return to Goods Return, the system adds stock for the items (and creates batches).
  • If you change from Goods Return to Goods Rejection, the system removes the stock that was added (and clears batches).
  • If you keep Goods Return but change items (add, remove, or change quantity/rate), the system adjusts warehouse stock and batches accordingly (remove for deleted lines, add for new lines, update for changed lines).
• The customer’s branch current balance is adjusted: if the branch changes, the old branch balance is increased by the old total and the new branch balance is decreased by the new total; if only the total changes, the balance is adjusted by the difference.

5. Change Credit Note Status

You can change the status of a credit note only in allowed ways. The system uses rules such as:

• Draft → you can move to Open or Cancelled.
• Open → you can move to Closed or Cancelled.
• Partially Used → you can move to Closed (depending on configuration).
• Used, Closed, Cancelled → no further status change (or only certain transitions as per your setup).

When you cancel a credit note:

• The system reverses any amounts already applied to invoices: each invoice’s balance is increased back by the amount that had been applied, and the customer’s branch current balance is increased by the credit note total (so the credit is effectively taken back).
• If the type is Goods Return, the system removes the stock that was added (and clears batches) so inventory is reverted.
• The credit note status is set to Cancelled.

6. Apply Credit Note to Invoices

For a credit note that is Open or Partially Used (not Draft, not Used, not Closed), you can apply part or all of its available balance to one or more invoices.

• You choose the invoices and the amount to apply to each invoice.
• The system checks:
• The credit note is not in Draft, Used, or Closed status and has available balance > 0.
• Each invoice exists and the amount applied does not exceed that invoice’s balance amount.
• The total amount you are applying does not exceed the credit note’s available balance.
• For each invoice:
• • The invoice’s balance is reduced by the amount applied (and invoice status may move to Partially Paid or Paid).
  • The customer’s branch current balance for that invoice’s branch is reduced by the amount applied.
• The credit note’s available balance is reduced by the total applied. The credit note’s invoices applied list is updated. If available balance becomes zero, the status is set to Used; otherwise it is set to Partially Used.

This lets you allocate the credit to the correct invoices when the customer pays or when you settle their account.

7. Remove One Invoice from Credit Note Applications

For a credit note that has been applied to one or more invoices, you can remove the application from one invoice (by specifying the credit note, the invoice, and the application record).

• The system:
• Increases that invoice’s balance back by the amount that had been applied from this credit note.
• Increases the customer’s branch current balance for that invoice’s branch by the same amount.
• Increases the credit note’s available balance back by that amount.
• Removes that invoice from the credit note’s invoices applied list.

The credit note status is updated: if available balance equals the total, status becomes Open; if available balance is between 0 and total, status becomes Partially Used; if available balance is zero, status becomes Used.

The credit is again available to apply to other invoices or to refund.

8. Refund (Pay Back Customer)

For a credit note with available balance > 0, you can record a refund: money you pay back to the customer from your bank.

• You enter refund amount, refund date, bank (optional), reference, and notes.
• The system checks:
• Refund amount does not exceed the credit note’s available balance.
• If a bank is selected, the bank exists and has sufficient available balance (the system will deduct the refund amount from the bank).
• The system:
• • Deducts the refund amount from the selected bank’s available balance (if bank is provided).
  • Adds the refund to the credit note’s refunds list.
  • Reduces the credit note’s available balance by the refund amount.
  • Updates status: if available balance becomes zero, status is set to Used; if available balance is between 0 and total, status is set to Partially Used.

9. Delete a Refund

You can delete a specific refund from a credit note. The system:

• Increases the bank’s available balance back by the refund amount (if a bank was used).
• Removes that refund from the credit note’s refunds list.
• Increases the credit note’s available balance back by the refund amount.
• Updates status: if available balance equals the credit note total, status is set to Open; otherwise Partially Used.
• The amount is again available to apply to invoices or to refund again.

10. Delete a Credit Note

You can delete a credit note only when its status is Draft, Open, or Cancelled (not when Partially Used, Used, or Closed). If the credit note has already been applied to invoices or refunded, you may need to remove those applications or refunds first, or the system may allow deletion and perform reversals depending on status.

When you delete a credit note (and status is not Cancelled):

• For each invoice in invoices applied, the system removes this credit note from the invoice’s credits applied list, increases the invoice’s balance back by the amount that had been applied, and updates the invoice’s payment status.
• The customer’s branch current balance is increased by the credit note total (reverses the reduction done at create).
• If the type is Goods Return, the system removes the stock that was added (and clears batches).
• The credit note record is then permanently removed.

If the credit note was already Cancelled, deletion only removes the record (no balance or stock reversal).

Summary of Rules (Quick Reference)