Account&See Invoicing and Accounting

Credit Notes

Why do you need credit notes?

We have had several customers move over to our software because, unbelievably, their existing invoicing software did not offer the option to create Credit Notes - or Credit memos. Credit notes are used all the time and must be a feature of any invoicing or accounting package. The following examples cover some of the times when credit notes are used.
  • Goods returned is probably the most common reason for creating a credit note. Goods are returned for a number of reasons - wrong colour or specification, your customer no longer requires them, faulty goods, two employees ordered the same goods, incorrect goods supplied etc.
  • Short Deliveries - whether the short supply is caused by loss of goods by carrier, an error during packaging or lack of stock (although Account&See has a unique procedure for incomplete invoices) - if you have invoiced your customer for 10 widgets and they only receive 9 - it is common practice to issue a credit note for the missing 1 widget - rather than forwarding the missing widget (in many cases, the cost of delivery can be in excess of the value of the widget). Account&See also includes 'customer stickies' that can be used instead of credit notes - so the next invoice created would be for 10 widgets, but you would supply 11.
  • Under payments is another common reason for creating a credit note. If you create an invoice for $1,100.13 - the customer may misread the amount and send you payment for $1,100.00. You can either carry the remaining 13 cents over into the customer's balance - which will be visible on statements of account and the customer's account ageing, or you may wish to 'tidy up' the balance and create a credit note for $0.13.
  • After Sale Discounts - a few times in the past we have misread the customer's order and instead of printing a customer's letterhead on 100gsm Vellum Laid, we have printed it on 100gsm Cream paper - it is often cheaper to offer them a $20 discount than reprint the order. Other situations would be where the product wasn't quite right and the customer says they will accept the goods if you can knock $50 off the price. In these instances a credit note would be generated for the amount of the agreed discount.

Creating Credit Notes with Account&See

Credit Notes are created in exactly the same manner as Standard Invoices except that the value of the credit note is a negative amount. A Credit Note can be a part credit against an issued invoice, a full credit, or even a credit against multiple invoices.

There are two ways to assemble a credit note ...
The first is to open a new Standard Invoice, select the customer and in the description column type 'To crediting Invoice Number 1234' and enter the negative amount to credit in the price column (such as -450.00 if the amount you wanted to credit was $450). However, if you use Product Codes and make use of the extensive reporting features in Account&See you should recreate the invoice in your credit note, replacing the quantities supplied with negative amounts.
For example, if you supplied 100 mousemats to a customer and they were later returned, in your credit note you should insert the mousemat product and then enter -100 (minus 100) in the quantity column.
If you had credited the mousemat invoice using the first method, the software will see the 100 mousemats as still in a 'sold' condition and this would skew results of mousemat sales. However, using the second example, the software calculates 100 mousemats being sold and then, when it reaches the credit note, will see -100 mousemats being sold, the two figures cancelling each other out so, as is the case, the software shows zero sales of mousemats for this transaction.

Automatic Credit Notes

Account&See can automatically create a credit note for the full amount of any invoice. From within the Account Book, right click the invoice you wish to credit and select 'Create Credit Note'. This will then generate a new Invoice (credit note) with all details from the original invoice recreated - but with all quantities of goods supplied converted to negative amounts. You can edit the quantities if a partial credit note is required.

See also Frequently Asked Questions

Questions
Explain Product/Customer/Prefix/Group/Type/Department Codes
What are the differences between all the invoice types?