Invoice and Payment
What is a credit note, and when do you use it?
A credit note corrects a previous invoice. See when it is used, what it should contain, and how to maintain proper documentation.
2 min read · Translated from Norwegian. Read the original
A credit note is a sales document that wholly or partially reverses a previous invoice. It is used when an amount, customer, item, VAT (Value Added Tax), or other information needs to be corrected, or when the customer receives a price reduction or returns an item.
What should a credit note contain?
The same documentation requirements generally apply as for an invoice. A credit note must have its own identification and normally clearly refer to the number of the original invoice. The amounts must make it possible to understand what is being reversed.
Full or partial crediting
Full crediting nullifies the entire invoice. Partial crediting corrects only specific lines or amounts. If the correct sale still needs to be invoiced, the seller sends a new invoice with the correct information.
Common errors
Do not delete a posted invoice, amend the original retrospectively, or use a negative, unmarked invoice without traceability. Also, ensure that the credit note and any new invoice are posted in the correct period and with the correct VAT treatment.
If an invoice is issued to the wrong legal buyer, it may be necessary for the original supplier to credit the incorrect recipient and invoice the correct recipient. Internal re-invoicing does not automatically fix an incorrect addressee.
On Proffi
Proffi can verify organisation numbers and legal names before invoicing. This reduces the risk of incorrect recipients, especially in groups with almost identical company names.
Source
Frequently asked questions
- Is a credit note a payment?
- No. It corrects the documentation. Any repayment or offsetting is handled separately.
- Must it refer to the original invoice?
- When correcting errors, the credit note should always have a clear reference to the original.
- Can I credit just one invoice line?
- Yes, if the document clearly shows which part is being corrected.