Credit Notes
For: Anyone reducing what a customer still owes — returns, rejections, rate or tax adjustments — then applying that credit to invoices or refunding it
A Credit Note is a sales adjustment against an invoice. Save makes it Draft and already posts the ledger and reduces Current Balance. Mark As Open is when you can Apply to Invoice or Refund. That apply is this credit note's available balance — not opening-balance Apply Credit on an invoice header.
What this module does
1. Creating a credit note
Pick Division, then Branch, then Warehouse — the rest stays locked until those three are set. There is only Save. That creates a Draft. There is no Save & Open.
Credit Note number: Auto-generated unless you turn that off under Credit Note Configuration on the form (prefix and next number). That same drawer stores Terms & Conditions. Default prefix is CN. Split credit notes use SCN. Locked after save.
Customer and shipping address: Customer must belong to the selected branch. The address has to be one of that customer's own addresses.
Invoice: Required. The picker lists this customer's invoices that still have a balance and are Sent, Partially Paid, or Overdue. Tick Use Invoice No to type a number instead of picking.
Type: Required. See section 2. Only Goods Return puts stock back.
Date, items, discounts, charges, tax: Credit Note Date is required. Line items with quantity and rate. Discount and extra charges follow the same company Discounts / Additional charges settings as other sales documents. GST from customer state vs company state. Round-off is on the totals.
Currency and exchange rate: From the invoice you pick, otherwise from the customer. If it differs from the company base, an Exchange Rate field appears.
From a Rejection Order: Convert to Credit Note on a rejection. The rejection number is shown locked. Saving marks that rejection Settled.
What Save already does: Posts the ledger, reduces Current Balance on this branch, and (for Goods Return) adds warehouse quantity. The note is still Draft until you Mark As Open.
2. Type — especially Goods Return
Type is not a label. Goods Return is the only one that returns stock.
| Type | What happens |
|---|---|
| Goods Return | The only type that puts quantity back into the warehouse. Return cost is the invoice batch cost, not the selling price. Cancel or uncancel of this type is blocked after stock was released |
| Goods Rejection | Value adjustment only. No stock add. Can be created from a Rejection Order, which then becomes Settled |
| Rate Difference, Quantity Shortage, Tax Adjustment, Post Sale Discount, Service Cancellation, Other | Value only. Warehouse quantity does not move |
Note: Changing type on a Draft from something else to Goods Return adds stock; changing away from Goods Return removes that stock. After Open you cannot edit type.
3. Viewing, searching, and the list
The list has status tabs. There is no Export and no Duplicate.
Finding a credit note: Search by credit note number, reference, or customer name. Filters: date, status, division, branch, customer, added by, and split.
Row actions: View, Edit (Draft only), Mark Credit Note As, Apply to Invoice (Open or Partially Used), Refund (same statuses, available balance greater than zero), Delete when nothing has been applied and there are no refunds.
Toolbar: Preferences is Credit Note Configuration (prefix, next number, Terms & Conditions). Also Manage Custom Fields, Refresh List, Reset Columns Width.
Detail header: Number and status. View Customer, Download, Print, Apply to Invoice, Refund, Edit, Delete.
Detail tabs: Basic Info, Stock Movement, Credit Applied (when invoices were mapped), Refund History (when refunds exist), Attachments if files were uploaded, History.
Unused credit on the customer list: That figure is available balance across this customer's credit notes. It is not negative Opening Balance and not Unused Amount on a Payment Received.
4. Editing a credit note
Only a Draft can be edited. The API rejects any other status.
What stays locked even on a Draft: Division, Branch, Warehouse, Customer, and the credit note number.
What you can still change: Invoice, type, date, items, amounts, notes, terms, address, attachments, and exchange rate. The new total cannot be less than amounts already applied to invoices.
5. Printing and downloading
Print and Download on the detail header. The PDF uses the company primary bank, billing and shipping addresses, and authorized signature.
6. Changing status
Mark Credit Note As is on the list row and the detail. Cancelled asks for confirm. Partially Used and Used are set when you apply or refund — you do not Mark As those.
| From | You can Mark As |
|---|---|
| Draft | Open, Cancelled |
| Open | Closed, Draft, Cancelled |
| Partially Used | Closed only |
| Used | Nothing. Mark As is hidden. Apply and refund have already used the balance |
| Closed | Open, Draft — blocked if anything was applied to invoices or refunded |
| Cancelled | Draft, Open — except a Goods Return, which cannot be uncancelled |
Open: Issued. Apply to Invoice and Refund become available. Available balance starts as the credit note total.
Partially Used / Used: Set automatically when you apply or refund. Used means available balance is zero. Used cannot change status.
Closed: Manual stop from Open or Partially Used. Revert to Open or Draft is blocked if invoices were applied or refunds exist.
Cancelled: Unapplies mapped invoices, puts Current Balance back, and for Goods Return removes the returned stock. Blocked while refunds exist. A cancelled Goods Return cannot be brought back to Draft or Open.
7. Apply to Invoice
On the list row and the detail when the credit note is Open or Partially Used. Modal title: Apply Credits to Invoices. This uses this credit note's available balance.
Which invoices: Same customer, still a balance, Sent, Partially Paid, or Overdue. Show current branch documents only limits the list to this credit note's branch. Cross-currency apply is blocked.
What happens on save: Available balance goes down. The invoice moves toward Partially Paid or Paid. Credit Applied on this detail lists those rows — you can remove a row to unapply. When available balance hits zero the credit note becomes Used; if some remains it is Partially Used.
Not invoice-header Apply Credit: That button on an invoice is opening-balance credit from the customer branch. Do not use this page to document that path — it lives on Invoices and Customer.
8. Refund
Same statuses as apply, and available balance must be greater than zero. Refund pays unused credit back instead of mapping it to an invoice.
What you enter: Refund amount (cannot exceed available balance), refund date, and From Account — a cash / bank / payment account. Reference and notes are optional.
What happens: Available balance goes down. Used or Partially Used follows the remaining amount. Refund History on the detail lists the rows. You can delete a refund; that amount comes back.
Cancel: Blocked while any refund remains. Delete the refunds first.
9. Deleting a credit note
Delete is offered only when nothing has been applied to invoices and there are no refunds.
Blocked when: Any invoice application, any refund, or status Used / Closed / Partially Used.
If it is not already Cancelled: Delete unapplies mapped invoices (if any slipped through), puts Current Balance back, and for Goods Return removes returned stock. The ledger journal is removed.
Business rules
| Topic | Rule |
|---|---|
| Ledger posts on save, including Draft | A credit note posts to the general ledger as soon as it is saved. Open → Partially Used → Used / Closed does not re-post. Cancelled reverses the journal |
| Subscription gate | Only creating a credit note is limited by your plan. Editing, Mark As, Apply to Invoice, refund, and deleting are not separately gated |
| A primary bank account is required to create | Same gate as Quote, Sales Order, Delivery Challan, and Invoice. Mark one under Banking → Banks with Make this primary. The bank details print on the PDF |
| Credit note number | Auto-generated with a CN prefix unless you turn that off under Credit Note Configuration on the form. That same drawer stores Terms & Conditions. Split credit notes use SCN. Locked after save |
| An invoice is required | Pick a pending invoice for this customer, or tick Use Invoice No and type the number. You cannot save without one of those |
| Division, Branch, Warehouse, Customer | All four are required to create, plus type, date, shipping address, and at least one item. After save, location and customer stay locked |
| Currency | Taken from the linked invoice when you pick one, otherwise from the customer. Cross-currency apply to a different invoice is blocked. An exchange-rate field appears when the currency differs from the company base |
| Current Balance moves on create | Saving reduces the customer's Current Balance on this branch by the credit note total, including a Draft. Cancel or delete puts that amount back |
| Only Goods Return returns stock | That type adds warehouse quantity at the original invoice batch cost. Other types do not touch stock. This is not Inventory Config Stock Deduct Source — it is the credit note type |
| You can only edit a Draft | Open, Partially Used, Used, Closed, and Cancelled cannot be edited. You cannot lower the total below amounts already applied to invoices |
| Apply to Invoice is not invoice-header Apply Credit | Apply to Invoice on this module uses this credit note's available balance against Sent, Partially Paid, or Overdue invoices. Apply Credit on an invoice detail is opening-balance credit from the customer branch — a different action |
| Apply and refund only while Open or Partially Used | Draft, Used, and Closed cannot be applied. Refund also needs available balance greater than zero. Used cannot change status at all |
| Cancelled Goods Return cannot come back | Uncancel is blocked because stock was released on cancel. Other types can Mark As Draft or Open from Cancelled. Cancel is blocked while refunds exist — delete the refunds first |
| Delete | Hidden once any invoice application or refund exists. The API also refuses Used, Closed, and Partially Used. Draft, Open, and Cancelled with nothing applied can be deleted |
| Attachments | Up to 3 files, 5 MB each |