What is a credit note?

Definition of credit note

A credit note is effectively a negative invoice - it's a way of showing a customer that they don't have to pay the full amount of an invoice. A credit note might either cancel an invoice out completely if it’s for the same amount as the invoice, or it might be for less than the invoice.

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You might issue a credit note to your customer if:

• your customer wasn’t happy with your service and you’re giving them a full or partial refund
• you overcharged your customer by mistake
• you issued an invoice by mistake and are happy that your customer doesn’t have to pay

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FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.