Correct an invoice with a credit note

A sent invoice can no longer be edited. To correct it, you issue a credit note: it cancels all or part of the invoice, with its VAT. The client then owes the reduced amount, or you refund them if they have already paid.

When to issue a credit note

• You invoiced too much: a mistake in quantity or price, a service not provided.
• You grant a goodwill gesture after sending.
• The client returns goods to you.
• You cancel an invoice that has already been paid in full.

An invoice that is still Pending (not sent) does not need a credit note: edit it or delete it.

Create a credit note

1. Open the invoice to correct, then … › Create a credit note. On a sent invoice, the Correct it with a credit note link does the same. From Sales › Credit notes, the Credit note button first asks you to choose the invoice.

2. Under Details, keep or change the suggested title, and add notes if needed (empty at first). They are printed on the credit note.

3. Under Reason, choose why: Billing error, Commercial discount, Goods return, Service cancellation or Other. Add a Note (optional) if useful. The reason is printed on the credit note.

4. Choose how to credit (1): Credit an amount or Credit line items (see below).

5. Click the red button at the top right to issue the credit note.

   

The credit note is issued straight away, with its own number (CN-000001, CN-000002…). If accounting is turned on, it is booked and reduces your VAT, at the time set by your method of accounting for VAT (see the legal basis below).

Credit an amount

Enter the amount to credit, VAT included (2). To Bill shows the Original invoice, what is Already credited and the Remaining refundable amount: you cannot credit more than that.

To Bill splits the VAT as on the invoice. If the invoice has several rates, the amount is split between them in proportion to each rate, for example one part at 8.1% and one part at 2.6%. A line at 0% keeps its VAT type.

Credit line items

The Credit line items tab (1) shows the invoice’s lines. Untick or delete the ones not concerned, and adjust the quantities or prices (2): here, one returned tray out of two. Each line keeps its VAT rate. The Amount excl. VAT, VAT and Total incl. VAT totals are shown as negative amounts.

What changes on the invoice

The original invoice shows the Credited amount and the Total to collect. Its status changes:

Before the credit note	Invoice status
Nothing paid, everything is credited	Credited
Nothing paid, part of it is credited	Partially credited
Partly paid, an amount is still owed	Partially paid
Already paid, the credit note gives back all or part of it	Refunded or Partially refunded

The invoice’s PDF and QR-bill now ask for the reduced amount. The credit note appears in the invoice’s payment history.

Refund the client

If the invoice had already been paid, To Bill prepares the refund: the invoice’s page shows a Refunds section, with the amount Pending.

1. Refund the client from your bank.
2. In Refunds, click Save.
3. Enter the Amount, the Date, the Method (Transfer, Cash, Card or Other) and a Note if useful.
4. Click Save.

If the invoice had not been paid, there is nothing to refund: the credit note simply reduces what the client owes.

The credit note

In Sales › Credit notes, click a credit note to open it.

1. The status: Issued. An issued credit note can no longer be edited.
2. The summary: the Amount in the client's favour, the VAT, the date, the Related invoice and the Reason.

The PDF bears the title Credit note, the reference to the original invoice, the reason and the Amount in your favour. It has no QR-bill. The reference to the invoice depends on the amount: a credit note that credits the whole invoice says “Cancels invoice INV-… dated …”; a partial credit note, “Credit note for invoice INV-… dated …”. A credit note already issued keeps its archived PDF.

To pass it on to the client:

• by email: click Send. The same window as for an invoice opens: recipient, contacts, subject “Credit note CN-…”, message and email preview, with the PDF attached. Once it has been sent, the button becomes Send again by email;
• by post: … › By post, as for an invoice. The client’s full postal address is needed;
• yourself: … › Download the PDF.

Your client also finds it in their client portal, on the Credit notes tab. A cancelled credit note can no longer be sent.

Cancel a credit note

… › Cancel credit note cancels it: its entry is reversed and the original invoice gets its amount back. The credit note stays archived for ten years, with the status Cancelled.

Cancel a whole invoice

To cancel a whole invoice, you can also open the invoice, then … › Cancel invoice. If it has already been paid in full or in part, To Bill issues the credit note for the cancelled amount itself. See Create an invoice.

Legal basis

• When the consideration is corrected, the turnover tax liability is adjusted “at the time when the correction is booked or the corrected consideration is collected”: Art. 41 para. 1 VAT Act. With the agreed consideration method, the credit note reduces the VAT of the period in which it is booked. With the received consideration method, the VAT follows what the client actually pays: the correction counts when the corrected amount is collected.
• An invoice that shows too high a VAT amount, or VAT that you were not entitled to charge, makes you liable for that VAT, unless, in particular, you correct the invoice: Art. 27 para. 2 VAT Act. “An invoice may be subsequently corrected within the period permitted by commercial law by a document requiring acknowledgement of receipt, which refers to and revokes the original invoice”: Art. 27 para. 4 VAT Act. In To Bill, this document is the credit note that credits the whole invoice: it says “Cancels invoice INV-… dated …”. Then issue a new invoice with the right VAT. To Bill does not collect the client’s acknowledgement: ask your client to confirm receipt, for example by email, and keep their reply with the credit note.
• The credit note is an accounting voucher: it is kept for ten years, even when cancelled: Art. 958f CO.