Credit note
A credit note is a document a seller issues to reduce what a customer owes, usually for returned goods or an agreed price reduction.
A credit note is issued by a seller to a customer to reduce the amount the customer owes. It is used when goods are returned, when a bill was overcharged, or when a discount is agreed after the sale. Instead of changing or tearing up the original invoice, the seller issues a separate document that adjusts it.
Example
A distributor sold a retailer Rs 50,000 of goods on credit. The retailer returns 5 cartons of biscuits that were close to expiry, billed at Rs 1,200 per carton. The distributor issues a credit note for 5 × 1,200 = Rs 6,000.
| Amount | |
|---|---|
| Original invoice | Rs 50,000 |
| Credit note for returned cartons | − Rs 6,000 |
| Retailer now owes | Rs 44,000 |
Why it matters
- The original invoice stays intact, so invoice numbers have no gaps.
- The customer's ledger shows exactly why his balance went down.
- Stock records show the returned goods coming back in.
- For sales tax registered businesses, the adjustment is documented rather than hidden.
The buyer's side of the same return is often recorded with a debit note.
How software handles it
In trading software, a sales return is entered against the customer, so stock and the customer's ledger both adjust in one step. In Taajir, the sale return is linked to the original invoice, and the updated balance can then be sent to the customer on WhatsApp.
Tell us about your business.
We reply with a price, a demo time and the setup that fits your branches, counters and users.