A credit note reduces the value of an invoice you have already sent. Use one when you billed too much, a job was cancelled, goods came back, or you agreed a discount after the fact. The invoice stays on record, the credit note sits next to it, and both show up in your reports.
What a credit note is in Rebill
- It is issued against one invoice. You can credit the whole invoice or only the lines (or part of a line) you choose.
- It carries VAT, line by line, at the rate the invoice charged. Your credit notes on an invoice never reverse more VAT than the invoice charged at each rate, together or one by one.
- It gets its own number in its own sequence: CN-0001, CN-0002 and so on. Your invoice numbers are not affected.
- It is emailed to your client if you tick the box, and you can send it again later.
- It cannot be edited or deleted once issued. If you get one wrong, issue another credit note for the remainder instead of changing the first.
VAT-registered? Use a credit note to correct a sent tax invoice
When you reduce the value of a tax invoice you have already given a client, the VAT Act expects you to give them a credit note with specific details on it: the words "credit note", your name, address and VAT number, the client's details, the date, the amount of the reduction and the VAT on it, a short reason, and enough information to identify the original invoice. Rebill prints these details on every credit note, and titles the document TAX CREDIT NOTE when your account has a VAT number (otherwise CREDIT NOTE). This is a general description, not legal advice: if you are unsure how a correction should be treated on your VAT return, ask your accountant or SARS.Issuing a credit note
- 1
Open the invoice
Go to Invoices and open the invoice you want to credit. It must be Sent, Partially paid or Paid. Drafts are simply edited or deleted, and cancelled or fully credited invoices cannot be credited again. - 2
Click More actions → Issue credit note
Open the More actions menu (the ⋯ button top right) and click "Issue credit note". The form shows how much is left to credit, and if the invoice uses more than one VAT rate, how much is left at each rate. - 3
Choose what to credit
For an invoice with no credit notes yet, "Credit the full invoice" is on by default and credits every line, including any discount on the invoice. Turn it off to credit only some lines: remove the lines you are not crediting and change the Quantity or the price of a line to credit part of it. If the invoice already has a credit note, "Credit everything that's left" is on by default and credits the whole remaining balance, as one balance line per VAT rate. It closes the invoice exactly: the value and the VAT, to the cent. Turn it off to credit only some of the lines that are left. Crediting all the lines left at a VAT rate, at their full quantity and invoice price, closes that rate exactly too, even when rounding on earlier credit notes means they no longer add up to the cent (by a little more on an invoice with a fixed discount). A line you credit at a lower price, or a line of your own, is credited as you typed it, give or take a few cents. If your selection leaves part of the invoice open, the form shows how much. - 4
Add the reason
The Reason is required (up to 500 characters). It is printed on the credit note, so write it for your client, for example "Event cancelled by the client" or "Two hours were not worked". - 5
Set the date
The Date is today by default. It can be any date from the invoice date up to today, never in the future. If the date falls before your current VAT period, Rebill warns you, because that period may already be filed. - 6
Add notes and choose whether to email it
Notes are optional and print on the credit note. "Email to client" sends the credit note to the client's email address as soon as it is issued; it is on by default when the client has an email address. - 7
Check the preview and click "Issue credit note"
The preview on the right is the document your client will receive. When it looks right, click "Issue credit note". The credit note is numbered and issued straight away: there are no draft credit notes.
What happens to the invoice and the money
Rebill applies the credit to the invoice first, up to what the invoice still owes. Anything beyond that is credit on the client's account. Here is how that plays out for an invoice of R1,000:
| Situation | Credit note | Result |
|---|---|---|
| Unpaid | R1,000 (the full invoice) | Invoice becomes Credited and owes R0 |
| Unpaid | R200 | Invoice stays Sent and now owes R800 |
| Unpaid, R200 credited, then R800 paid | R200 | Invoice becomes Paid: the credit note and the payment settle it together |
| Already paid | R200 | Invoice stays Paid; the R200 becomes credit on the client's account |
| Already paid | R1,000 | Invoice becomes Credited; the R1,000 becomes credit on the client's account |
A credit note is never counted as a payment received. The invoice page shows what was paid in cash, what was credited, and lists each credit note under the invoice.
Leftover credit: keep it or pay it back
- Keep it for the next invoice. Rebill applies the credit to the client's next invoice in the same currency, oldest credit first, the same way it applies any other credit. See Automatic credit application.
- Pay it back and record a refund. Pay the client yourself, then click "Record refund" on the result screen or on the client's Credit Balance card. See Record a refund.
What you cannot change on a credited invoice
Once an invoice has a credit note, the two documents have to keep matching. So on that invoice:
- The invoice number, lines, discount, VAT settings, currency, client and invoice date are locked. Notes, labels, due date, PO number and payment terms can still be edited.
- It cannot be cancelled. Credit the remaining balance instead.
- Its payments cannot be removed. Record a refund if you paid money back.
- It stops collecting late fees, and a late fee that is already on it cannot be waived. Credit the late fee line with a credit note instead.
- Once fully credited it is never shown as overdue. A part-credited invoice that still has a balance past its due date is still shown as overdue.
Finding, downloading and resending credit notes
Every credit note appears on the Credit notes tab next to your invoice list, and under the invoice it credits. Open one to see the document, Download PDF, or click "Email to client" to send it again. The client also sees it in their statement, where it appears as a credit against their account (for example "Credit note CN-0003 (Invoice #0042)"), and on the invoice's online page.
Your credit notes also flow into your reports: the VAT report subtracts them from your output VAT in the period the credit note applies to, and the profit and loss report subtracts them from income on the accrual basis (on the cash basis, which is the default, no money moved, so only refunds you record reduce income). See the VAT report.
Not VAT registered?
Credit notes work the same way, they are just titled CREDIT NOTE and show no VAT. For a small correction that has not been paid, adjusting or cancelling the invoice may be simpler. See Cancelling or deleting an invoice.