How to write a credit note (and when you need one)

When you need one

• The customer cancels a job you've already invoiced
• You agree a discount after sending the invoice
• You charged for something you didn't do or supply
• The invoice has the wrong amount

Why not just edit the invoice?

Once an invoice has been sent, the customer and your records both have it. Changing or deleting it leaves a gap in your numbers and a mismatch with what the customer holds. A credit note keeps a clear trail: invoice, then credit.

What a credit note must show

• Its own number and the date
• Your name and address (and VAT number if registered)
• The customer's name and address
• The number and date of the invoice it relates to
• Why it's being issued
• What's being credited and the amount
• If VAT registered: the VAT rate and the VAT credited

Cancel all, or take some off

To cancel an invoice, credit the whole amount. For a discount, credit just that amount. Whatever's left on the invoice is what the customer still owes.

If they've already paid

Give the money back and note when. On the cash basis, the refund comes off your income on the day you pay it back, and any VAT on it comes off your VAT return.