Mistakes, returns and price changes happen after an invoice is issued. Credit notes and debit notes correct the record without altering the original invoice.
Credit note
A credit note is issued by a seller to reduce the amount a buyer owes. Common reasons:
- Goods returned by the customer.
- A price correction or discount agreed later.
- Short supply or damaged goods.
Example: you invoiced 10,000 and the customer returns goods worth 2,000. You issue a credit note for 2,000, reducing the customer's balance to 8,000 and, if the goods are stocked, returning them to inventory.
Debit note
A debit note is used to increase an amount owed, or by a buyer to return goods to a vendor. Common reasons:
- You return goods to a vendor, reducing what you owe.
- Additional charges apply to an earlier invoice.
Example: you bought goods worth 6,000 and return items worth 1,000. A debit note for 1,000 reduces what you owe the vendor and deducts the stock.
Tax impact
Credit and debit notes normally adjust the tax on the original invoice as well. Rules and time limits differ by country, so confirm the current requirements with your accountant. See GST invoice guide, VAT in Thailand, VAT in Vietnam.
In Onyx Bills
Credit notes are issued against a posted invoice to reduce the balance and return tracked stock. Debit notes return goods to a vendor, reduce what you owe and deduct stock in one entry.
Frequently asked questions
Is a credit note the same as a refund?
No. A credit note reduces the balance owed. A refund pays money back; a credit note can be settled by a refund or adjusted against future invoices.
Can I cancel an invoice instead of issuing a credit note?
Only if your rules allow it and the invoice has not been relied on. Once shared with the customer or filed, a credit note is usually the correct route.
Do credit notes affect stock?
If goods are physically returned, yes — stock increases. If it is only a price adjustment, stock does not change.
This guide is general information, not accounting, tax or legal advice. Rules and rates change, so confirm the current position with a qualified professional.