RisingERP - Credit Note

Credit Note

A Credit Note is a communication from the seller to the customer, indicating that a credit has been applied to their account for returned goods.

Issued for the value of goods returned by the customer, a Credit Note may be less than or equal to the total order amount.

1. How to Generate a Credit Note

Users can create a Credit Note against the Sales Invoice or directly from the Sales Invoice without a reference. Notably, the invoice must be paid using a Payment Entry to facilitate Credit Note creation.

1. Navigate to the respective Sales Invoice and click on Create > Return / Credit Note.
2. Customer and item details will be fetched as specified in the Sales Invoice.
3. If the customer has made partial or full payment, a Payment Entry against the original Sales Invoice is necessary.
4. Save and Submit.

The Item quantity and Payment amount will be negative, reflecting the return.

1.1 Impact on Ledger

Upon creating a Payment Entry against the original Sales Invoice, the amount is added to the customer's account in the negative. This adjustment ensures that the credited amount is considered in subsequent purchases made by the customer.

The ledger is affected as follows after a payment entry against a returned invoice:

You can refer to the Sales Invoice page for additional details.

1.2 No Payment Made Against Sales Invoice

If no payment was made against the original invoice, the Sales Invoice can be canceled. However, if only a portion of the items (e.g., 4 out of 10) is being returned, creating a Credit Note is beneficial for ledger updates.

2. Example

Consider the example of customer David, who purchased PVC pipes worth ₦5,000 + taxes. Upon delivery, David discovered that the products were damaged. Now that David has returned the product, a Credit Note will be issued..