What is a credit note and when should you issue one?

A credit note is a document that reduces or cancels an invoice you already issued. Instead of editing or deleting the original, you issue a separate, numbered document that refers to it and states the amount to take off, so your records and your customer's stay correct.

Mistakes and changes happen after an invoice goes out: a wrong price, a returned product, a discount agreed later. The tempting fix is to open the invoice and change it. In many countries that is exactly what you should not do, because the customer may already have booked it. A credit note is the clean way to correct the record.

When to issue a credit note

The rule of thumb: once an invoice has a number and has left your hands, you correct it with a credit note. Until then, you are still working on a draft.

Why not just edit the invoice?

An invoice is a record that both sides rely on. Your customer may have entered it in their books, paid it, or passed it to their accountant. If you change it quietly, the two versions no longer match, and nobody can tell which one is right.

Tax rules usually point the same way. In the EU, the VAT Directive treats a document that amends and specifically refers to the original invoice as an invoice itself, so a credit note carries the same weight as the invoice it corrects. Many countries also expect invoice numbers to run in an unbroken sequence, which a deleted invoice would interrupt; our guide to how invoice numbering works explains why. Rules differ per country, so check the details with your accountant.

What a credit note should contain

Requirements vary by country, but a credit note generally carries:

• Its own number, from your normal numbering, with an issue date.
• A clear reference to the original invoice: its number and date.
• Your details and the customer's, the same as on the invoice.
• What is being credited: the lines, quantities and prices, with the VAT on each.
• The totals: the amount before tax, the tax, and the total to take off.
• A short reason, such as a return or a price correction, so anyone reading it later understands why.

The amounts on a credit note reduce what the customer owes. Whether the tax you already declared can be adjusted, and when, depends on local rules; in many countries the credit note is what allows you to reduce it.

Credit note vs refund

The two often travel together but are not the same thing. A credit note is a document: it says the invoice is now worth less, or nothing. A refund is a payment: money going back to the customer.

• If the customer has not paid yet, the credit note lowers what they owe. No money moves.
• If the customer already paid, you can refund the difference, or agree to set the credit against their next invoice.

Either way, issue the credit note so your records explain the money. How payments are matched to what is open is covered in how payment allocation works.

How it works in Swiftly Workspace

In Swiftly Workspace on a Mac, a credit note always starts from the invoice it corrects:

1. In the sidebar, open Finance, then Customer Documents.
2. Right-click the finalized invoice and choose Create Credit Note. The option appears on finalized invoices, not on drafts or proformas.
3. In the Create Credit Note window, under Select lines to credit:, tick the lines to credit and set the Credit Qty for each. The totals at the bottom update as you go.
4. Click the checkmark in the toolbar (its tooltip says Create credit note).

The credit note gets its own number straight away and opens in a window of its own. It keeps the invoice's customer, currency and payment terms, and it refers back to the original invoice. You can't credit more than what remains on a line, so two credit notes for the same item can't add up to more than you invoiced. Credit notes then sit alongside your invoices and proformas in Customer Documents.

New to creating the invoice itself? Start with how to create and finalize an invoice on Mac, and run through the invoice checklist before you finalize, so fewer invoices need correcting later. For the difference between the document types, see proforma vs invoice.

Frequently asked questions

Can I issue a credit note for part of an invoice?

Yes. A credit note can cover one line, part of a line's quantity, or the whole invoice. You credit exactly what changed and leave the rest of the invoice as it is.

Is a credit note the same as a negative invoice?

In practice it does the same job, but many countries expect a document clearly titled as a credit note that refers to the original invoice. Check what your tax authority accepts before using negative amounts on a normal invoice.

Do I need to send the credit note to my customer?

Yes. The customer needs it to correct their own records and, where it applies, their tax. Send it the same way you sent the invoice.

Can I delete an invoice instead of crediting it?

Not once it has been issued and numbered, in many systems and under many tax rules. Deleting leaves a gap in your numbering and a mismatch with the customer's books. Credit the invoice instead, then issue a new one if needed.