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.

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

Got questions? Ask Emily!

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