Within a business, credit notes perform two functions: Instead, a credit note should be issued to cancel part or all of the invoice or to indicate a refund is owed. An invoice is used to document what a buyer owes and it should never be deleted after it has been sent to the customer. They are used as evidence of the seller’s reduction in sales or the buyer’s reduction in what is owed. What is the purpose of a credit note?Ĭredit notes are used in accounting to legally document refunds or cancellations. Most commonly, credit notes are issued to cancel a customers’ debts, reimburse customers when incorrect or damaged products are delivered, or rectify sellers’ invoicing errors. It indicates that the seller is to return funds to the buyer or cancel what is owed. ![]() ![]() Create credit notes for freeĪ credit note, also called a credit memo, is a legal document that is issued by a seller to a buyer. This article explains how to correctly and legally change an invoice with a credit note, and offers free credit note templates in Word, Excel, and PDF format. If you need to change an invoice, this needs to be done correctly and according to UK law. Once sent, you can no longer edit the invoice directly, and a credit note must be issued instead. A customer’s address may be typed wrongly, a discount may not have been applied, or the items themselves may be incorrect. No matter how careful you are when invoicing, mistakes can happen.
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