Free credit note template

About this document

A credit note undoes part or all of an invoice. You use one when you have over-billed, when work was returned or cancelled, or when you have agreed a discount after the fact. What you should not do is edit or delete the original invoice — invoice numbers are meant to be sequential and unbroken, and a gap is exactly what an auditor looks for.

Reference the original invoice number on the credit note so the pair can be matched. If you are crediting the whole thing, credit the full amount including tax; if part of it, credit only the lines that changed.

What goes on a credit note

• The words "Credit note", not "Invoice"
• Its own unique number, in the same sequence or a dedicated one
• The number and date of the invoice being credited
• The reason for the credit
• The lines being reversed, with the same descriptions as the original
• The tax being reversed, shown separately
• The total credited

This is general information, not tax or legal advice. Requirements differ by jurisdiction and by the kind of work you do — check with your own accountant or tax authority if anything is unclear.

Questions

Should the amounts be negative?

The document is understood as a reduction, so most people enter positive figures and let the heading carry the meaning. If you prefer explicit negatives, enter a negative rate and the totals will follow — the tool handles a negative document correctly.

Can I just delete the original invoice instead?

Better not to. Invoice numbers should run unbroken, and a missing one is a flag in any audit. Issuing a credit note leaves a clean, explainable trail.

What about the tax I already reported?

A credit note normally reverses the tax along with the amount, and you adjust it in the period you issue the note. The rules differ by country — worth a word with your accountant if the sum is large.