Credit Memos & Refunds
A Credit Memo (Credit Note) is used to partially or fully reverse a posted sales invoice. It reduces the amount owed by the customer.
When to Use a Credit Memo
- Goods returned by the customer
- Overcharge on a posted invoice
- Discount agreed after invoicing
- Cancellation of a posted invoice
⚠️ You cannot edit or delete a posted invoice. A credit memo is the correct way to make corrections.
Creating a Credit Memo
Go to Sales → Credit Memos → New.
- Select the customer
- Add lines for the items/amounts being credited
- Set quantities and prices (they will reduce the customer balance when posted)
- Click Post
Posting creates the journal entry:
- DR Revenue — reverses the sale
- CR Debtors (AR) — reduces what the customer owes
Applying a Credit Memo
A posted credit memo can be applied against an open invoice:
- Open the credit memo
- Click Apply to Invoice
- Select the invoice and the amount to offset
This reduces the invoice's outstanding balance without requiring a cash payment.
Stock Impact
Credit memos do not automatically return stock. To restore inventory, create a Stock Adjustment with reason Customer Return.