Credits

Credit Notes

How to process a Credit Note to refund customers and return goods back into stock.

Creating a Credit Note

Credits can be created at any time from the Credit Notes module.

1. From the left navigation click Sales, then select the Credit Notes module. 
   
2. Click New Credit Note.
   
3. Enter the customer in the customer details fields.
4. Enter the product you wish to credit.
5. Notice that the quantity is negative. This means stock will be returned into the system.
   
6. Enter a Sales reference, Completed date, and Credit Note Date to complete the Credit Note.
   By entering a Credit Note Date, the Credit Note will be made available for import into your accounting software.
   
7. Finally, for your own reference, enter in a Payment Type at the bottom of the screen.
   
8. Click Approve to save Credit Note

Which payment type to choose depends on how you will refund the customer. Here are a few possible scenarios:

No Payment Required

Perhaps you've exchanged faulty items for new goods. Please see Return and Exchange for an explanation of how best to do this.

If this means that no money needs to be refunded, choose No Payment Required.

To Be Refunded

If you intend to return the money owed to the customer via a bank transfer, then enter To Be Refunded as the payment type. Import the Credit Note into your accounting software and arrange payments from there.

Cash or Card

You may wish to return money to the customer directly using cash from an available register - in which case the payment type will need to be set so that the Close Register process tallies the correct totals. If you do this, select a payment type like Cash or Card, but remember to remove the invoice date from the transaction - this will allow the amount to be removed from the Register Totals.

On Account

If you extend credit to a customer, you could simply mark the credit as On Account. By importing to your account software, the credit will be offset against other outstanding invoices on the customer's account; and their monthly Statement will only show their outstanding balance.

Creating a Credit Note from an existing Sales Order

It is possible to automatically create a credit from an existing Sales Order.

1. In the Sales Order module, hover over the cog icon of an order you’d like to credit then click Admin.
2. Click on Actions, and select Create Credit Note from Sales
   
3. In the window that appears enter the quantity of items to be transferred, or alternatively click Select All .
   
4. Click Create Credit Note from selected Products, which will create a Credit Note with selected Items.
5. Add a Payment Type to the created Credit Note and then click Approve

Notice that the sales related to the credited items are linked in the 'Linked Transactions' grid at the bottom of the screen.

Importantly - if you choose to use this method the COGS will be drawn from the related Sales Order, as opposed to the last cost. Therefore creating a Credit Note by this method is a much more accurate way of creating a credit.

Credit Notes where goods are not received back into stock

There may be occasions where you need to credit a customer, but you do not receive stock back into your inventory.

First, follow the steps above to complete a credit note in the usual way.

Once a Completed Date has been entered the Qty Moved column will pre-populate with values. You now need to go back into this column and make a few changes.

1. Click into the Qty Moved column for products that have not been received back into stock.
2. Delete the line items by clicking on the cross at the end of each row.
   
3. Click Save.

You can now Save the entire transaction.

Notice that the dollar total of the Credit remains the same, but the quantity of stock returned to the inventory has been reduced.

Writing off faulty goods

If you have received stock when crediting a customer and you later decide those items are faulty, you can use a stock adjustment to write off the stock.

To create an Adjustment

1. From the left navigation choose Stock and then click Adjustments
2. Click New Inventory Adjustments
3. In the transaction enter the product you want to write off, and enter a negative quantity to reduce the inventory
4. The dollar total of the adjustment should be negative
5. To complete the Adjustment, enter a Completed date, and a date to adjust to your accounting software
   

In your accounting software, the adjustment will become your journal, which will credit your stock on hand account, and debit your default expense account.

FAQs