Zikpro - Credit Note
Credit Note
A credit note is a document issued by a seller to the customer, indicating that a credit has been issued to their account against the returned goods of the buyer.
A credit note for the value of goods returned by the customer may be less than or equal to the order value.
1. How to make a Credit Note
The user may create a credit note against the sales invoice or create a credit note directly from the sales invoice without reference. Observe that to create a credit note, the invoice should be settled via a payment entry.
- Go to the corresponding sales invoice and click on Create > Return / Credit Note.
- The customer and item information will be retrieved as in the sales invoice.
- If partially or completely, the customer had already paid, record a payment entry against the initial sales invoice.
- Save and Submit.
The Item quantity and Payment amount will be negative since it's a return.
1.1 How does Credit Note affect ledger
Once the payment entry has been made against the original sales invoice, the amount will get added in negative to the customer's account so that the next time the customer makes a purchase, this amount will get deducted.
This is what happens to the ledger after a payment entry against an invoice return:
Refer the sale invoice page for any other details.
1.2 No payment was made against Sales Invoice
If no payment had been made on the original invoice, you may simply cancel the sales invoice. However, when only 5 of 10 items are returned from an invoice, making a credit note will be helpful for ledger updating.
2. Example
Customer Rohan bought PVC pipes (order value: £300 + taxes) but was delivered damaged goods. Upon product return, the system will create a credit note to refund/adjust.
Credit Note with payment entry in ERPNext for above example is as below:
3. Related Topics
1.Payment Entry
2.Debit Note
3.Sale Return