A credit note is a document a seller issues to reduce or cancel part or all of an earlier invoice. It shows what is being credited back to the customer and why. Use it for returns, errors or agreed adjustments. This free generator makes a PDF credit note in your browser.
When to use a credit note
Issue a credit note after an invoice has gone out and the amount owed needs to go down. Common situations:
- A customer returns goods and you accept the return.
- You billed the wrong quantity or the wrong price.
- A service was not delivered in full and you agree to a reduction.
- You charged the same item twice.
- You cancel an invoice and want a clean paper trail.
Do not change or delete the original invoice. Keep it, and issue a credit note that points to it. This keeps your records clear for you and for your customer. The credit notes guide explains the idea in more detail.
What to include on a credit note
The form fields map to what most customers and accountants look for:
- Your business name, address and email under "From (your business)".
- Customer name and address under "Billed to".
- Credit note number, separate from your invoice numbers.
- Date the credit is issued.
- Currency, matching the original invoice.
- Line items describing what is credited: description, quantity and unit price.
- Tax % per line, if the original items carried tax. Totals show the subtotal, the tax and the "Total credit".
- Notes, where you should write the original invoice number and the reason for the credit.
There is no due date on this document. The generator has no dedicated field for the original invoice number, so put it in Notes.
How to create a credit note with this generator
- Fill in "From (your business)": name, address and email.
- Enter the customer name and address under "Billed to".
- In "Document details", enter the credit note number, the date and the currency.
- In "Line items", describe each credited item with quantity and unit price. Click "Add item" to add more rows.
- Set the Tax % on each line to match the original invoice.
- In "Notes", write the original invoice number and the reason for the credit.
- Check the live preview and the "Total credit" figure.
- Click "Download PDF" and send it to your customer.
Nothing is stored between visits, so save the PDF yourself.
Common mistakes
- Not referencing the original invoice. Your customer needs to match the credit to the right bill.
- Editing the old invoice instead. Issue a new document so both records stay intact.
- Using the wrong tax rate. Credit the same tax that you charged.
- Mixing up amounts. Enter positive figures for the items credited. The document total is shown as a credit.
- Skipping the reason. A short reason in Notes prevents questions later.
- Forgetting to follow up. Decide whether the credit is refunded or applied to a later invoice, and tell the customer.
Credit note vs invoice
| Credit note | Invoice | |
|---|---|---|
| Effect | Reduces what is owed | Increases what is owed |
| Refers to | An earlier invoice | A sale |
| Due date | None | Usually set |
If you need to bill again with the corrected amount, create a new invoice. If payment was received and you want to confirm it, use a receipt.
Related reading
The credit memo vs credit note guide explains the naming difference. The invoice disputes guide shows how to handle a customer who questions a bill. Rules on credit notes and tax vary by country, so check with your tax authority or accountant.
Prefer to fill it in Word, Excel or by hand? Download our free invoice and receipt templates in DOCX, XLSX and PDF.
Frequently asked questions
- What is a credit note?
- A credit note is a document a seller issues to reduce or cancel an amount a buyer owes. Sellers use it for returned goods, pricing errors or agreed refunds. It usually refers to the original invoice and shows the amount credited back to the customer.
- When should I issue a credit note?
- Issue a credit note when you need to lower the amount on an invoice you already sent. Typical reasons are returned items, damaged goods, a billing mistake or a price adjustment. Do not edit the old invoice. Issue the credit note and keep both records.
- What is the difference between a credit note and a refund?
- A credit note is a document that records the reduction. A refund is the actual payment of money back to the customer. You can issue a credit note and then refund the amount, or let the customer use the credit against a future invoice.
- Is a credit note the same as a credit memo?
- In practice, yes. Credit memo is the common term in the US and credit note is common in the UK and elsewhere. Both describe a document that reduces the amount a customer owes. The name differs by region, not the purpose.
- What should a credit note include?
- Include your details, the customer details, a credit note number, the date, the original invoice number, a description of what is credited, amounts, any tax and the total credit. Requirements vary by country, so check with your tax authority or accountant.
- Does the credit note generator save my data?
- No. The tool runs in your browser and nothing you type is stored on our server. Your data is not kept between visits. Download the PDF and keep your own copy before you leave the page. The tool cannot recover it for you later, so save every credit note.