Credit Notes · Free forever

Free Credit Note Template

Issue professional credit notes to correct invoices, process refunds, or apply discounts. Instant PDF, no account, data stays on your device.

Create a Credit Note Free →

✓ No credit card✓ No signup✓ No data shared

No signup requiredData stays on deviceFree foreverInstant PDF download

What Is a Credit Note?

A credit note (also called a credit memo) is a document issued by a seller to reduce the amount a buyer owes. It is the opposite of an invoice — instead of requesting payment, it cancels or reduces a previous payment obligation.

Common reasons for issuing a credit note:

Invoice error: You overcharged, made an arithmetic error, or invoiced for the wrong item
Returned goods: The client returns products and you need to refund or credit their account
Service not delivered: You billed for work that was not completed as agreed
Agreed discount: You negotiated a discount after the invoice was issued
Goodwill credit: You want to partially compensate a dissatisfied client without issuing a full refund

What to Include on a Credit Note

A credit note must clearly reference the original invoice it is correcting. Include:

Header: "CREDIT NOTE" — clearly label it so there is no confusion with an invoice
Credit note number — use your own sequential numbering (e.g., CN-001)
Date issued
Reference to the original invoice number — e.g., "Issued against Invoice #INV-045"
Your business details and the client's details
Itemised credit amounts — mirror the original invoice line items for the credited portion
Tax adjustment — if the original invoice included VAT/GST, the credit note must show the corresponding tax reduction
Credit total
How the credit will be applied — refund to original payment method, applied to next invoice, or offset against a balance

Credit Notes and VAT

Credit notes have specific VAT implications in most jurisdictions. Get this right to avoid compliance issues:

EU businesses: A credit note must include the same VAT breakdown as the original invoice. Issue it within the same VAT period if possible — correcting VAT across periods may require adjustments on your VAT return.
UK businesses: HMRC requires credit notes to show the VAT amount being credited. Both parties must adjust their VAT accounts accordingly.
US businesses: If the original invoice included sales tax, the credit memo should reflect the corresponding sales tax adjustment. Rules vary by state.

Always keep a copy of the credit note linked to the original invoice for your records and any future audit.

Frequently Asked Questions

Should I cancel the original invoice or issue a credit note?

Issue a credit note rather than cancelling or deleting the original invoice. Cancellation leaves a gap in your invoice numbering, which can create audit problems. A credit note creates a paper trail showing that the original invoice was corrected or partially reversed.

Can a credit note be for a partial amount?

Yes. A partial credit note is issued when you are only crediting part of the original invoice — for example, one returned item from a multi-item invoice. Just list the specific line items being credited and leave the rest of the original invoice unchanged.

Does a credit note need a signature?

In most jurisdictions, no. A credit note is valid as a digital document without a signature, provided it contains all the required information. Some clients may request a signed copy for their own accounts — you can add a signature image in invoicePrivate.

How do I number credit notes?

Use a separate sequential series from your invoices, such as CN-001, CN-002, etc. This makes it easy to distinguish credit notes from invoices in your accounting records and prevents numbering gaps in either series.

Your First Invoice in Under Three Minutes

Free forever. No credit card, no signup, no watermarks. Open the tool and start invoicing.