Customer Credit Note and Sales Return

A Customer Credit Note reverses all or part of a sale. Use it for goods returned, overbilling, or a discount agreed after the invoice went out. It reduces what the customer owes and, depending on the type you choose, puts the stock back into your warehouse.

Where to find it

Go to Sales > Credit Notes > New Direct Credit Note. To credit a specific invoice instead, use Invoice to Credit Note, which pre-fills everything from the original.

Before you start

The customer must exist and have a transaction history to credit against.
The accounting period must be open for the credit note date.
You need the SA_SALESCREDIT permission.

Header field reference

Field	Required	Description
Customer	Yes	Who is receiving the credit.
Customer Branch	Yes	The branch the credit relates to. Drives the tax group.
Transaction Reference	Yes	The unique reference for this credit note, from your pattern in Setup > Transaction Reference.
Sales Type	No	The price list applied, which also decides whether line prices include tax.
Price List / Sales Lists	No	The pricing level used for the credited items — normally matching the original sale.
Customer Discount	No	The predefined discount percentage on the customer record, applied automatically so pricing stays consistent with their agreement.
Shipping Company	No	The carrier linked to any returned goods.

Dates

The Credit Note Date is the date the credit is recognised. Stock returns and ledger entries are posted on this date, so it must fall within an open accounting period.

Branches & Departments

Branches represent separate business locations or units. Enable them under Setup > Preferences > Use Branches Only.
Departments are internal divisions responsible for a specific function, letting you attribute the credit to the right part of the business.

Line Items

Column	Description
Item Description	The item being credited.
Quantity	How many units are being credited.
Unit	The unit of measure.
Price	The unit price, normally matching the original sale.
Discount	Any line discount applied.
Total	The line value being credited.

Quantity Management

You can add the same item several times on one document at different prices. If you would rather a repeated item update the existing line instead, enable Setup > Preferences > Update Existing Line Item in Sales.

Credit Note Types

There are two ways to handle a sales return, and the choice depends on what happens to the physical stock.

Type	What it does
Items Returned to Inventory	For goods the customer returns that you can sell again. The system adds the items back into the warehouse and the Quantity On Hand increases.
Items Written Off	For goods that are damaged, expired or otherwise not resaleable. The customer is credited, but the stock is not returned to sellable inventory.

This is the most consequential field on the form. Returning damaged goods to inventory inflates your stock with items you cannot sell, and correcting it means voiding the credit note and re-issuing it.

Items Returned to Location

The warehouse or inventory site the goods are restocked into. When a credit note is processed for physical items, stock levels for the selected location are updated to reflect the return.

Insufficient Quantity Issue

The system prevents negative stock by default. Where a credit or its related movement would drive stock below zero, the entry is blocked with the message:

Marked items have insufficient quantities in stock as on day of delivery.

Check the inventory location and the transaction date first — those are the usual causes.

Allowing Negative Inventory

If your workflow requires it, enable negative stock under Setup > Preferences > Allow Negative Inventory. Bear in mind that stock valuation becomes unreliable until the balance is corrected.

Total Details

Field	Description
Sub-total	The sum of credited line values before tax and overall adjustments.
Shipping Cost	Any freight being credited back.
Discount	Any overall discount applied to the credit.
Tax Details	The tax being reversed, broken down by rate.
Round Off	A fixed adjustment to the final credit total.

Comments

Record the reason for the credit — "goods damaged during transit", "short delivery", "price correction". This is the field an auditor reads first.

Attachments

Attach photographs of returned goods, signed return authorisations, or customer correspondence supporting the credit.

General Ledger (GL)

Account	Effect
Sales Account	Debited — reverses the revenue previously recorded.
Tax Accounts	Debited — returns the tax originally collected.
Accounts Receivable	Credited — reduces what the customer owes.
Inventory & COGS	Where items return to stock, inventory increases and cost of goods sold is reduced.

Allocation from

The Allocation page links a credit note to specific outstanding transactions — Sales Invoices or Bank Payments — to reduce the customer's open balance. Reach it with the Allocate action from the credit note list or view page.

Column	Description
Transaction Type & Reference	The document being settled and its reference.
Date & Due Date	When it was raised and when it falls due.
Total Amount	The full value of the transaction.
Left to Allocate	How much of it is still unsettled.
This Allocation	The amount of the credit applied against it.

A credit note that is never allocated reduces nothing. The customer keeps showing the original invoice as outstanding until the credit is applied to it.

Credit Note Report

For a consolidated view of returns and credit adjustments, go to Reports > Sales > Credit Notes. Filter by date range and export as PDF or Excel. PDF templates can be created or modified from the Reports area.

Credit Notes List — find credit notes
View Sales Credit Note — read one in detail
Invoice to Credit Note — credit a specific invoice
Allocations — apply the credit
Invoices — the sale being reversed

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