A credit note is a document given by one party to another signifying that the sender has given the recipient “credit” which can be used against past or future purchases. Create a credit note if you need to reduce the amount of an invoice or a future invoice.
What can I do in CiviPlus?
Create credit notes independently of contributions and then assign that credit to one or more existing invoices, to reduce the recorded amount owed for that invoice by a contact
Record refunds against credit notes
Along with the above capabilities, credit notes also follow the credit note numbering in an accounting-compliant way, providing the option to allocate credit for different invoices and registering the summary of the allocations
Pre-requisite
For credit notes to function, you must set up one or more companies using the "Companies" configuration. It defines the invoice/credit note templates and numbering schemes.
For a single company: Make sure the default company is set up which will then be used to create a credit note and the numbering will applied based on the numbering provided for that company organisation
For multiple companies: Make sure at least one default company is set up and any new companies should be set up which can then be selected under organisation while creating a credit note
Go to Administer > CiviContribute > Companies
Click on the 'Add Company' under the 'Company Listing' to create a new company
Add details of the company
Organisation: Select the organisation contact from the dropdown/search
Invoice Template: Select the invoice template from the dropdown/search
Invoice Prefix: The user can set a prefix for the invoice number to be displayed on invoices (eg. INV 0001 (INV is the prefix))
Next Invoice Number: Enter the next invoice number which will be used for the next invoice and will be increased sequentially by +1
Credit Note Template: Select the credit note template from the dropdown/search
Credit Note Prefix: The user can set a prefix for the credit note number to be displayed on the credit note (eg. CR 0001 (CR is the prefix))
Next Credit Note Number: Enter the next credit note number which will be used for the next credit note and will be increased sequentially by +1
Accounts Receivable Payment Method: Each company requires a payment method to be used as the accounts receivable account for unpaid invoices. This is created automatically for the first company. For additional companies, you need to create this before creating the Company. You can set it up from Administer > CiviContribute > Payment Methods.
How to create a credit note from a contribution and allocate credit
Go to the Contribution tab of a contact record
Create a credit note with one of the three options
Click on the ... on the righthand side of a Contribution and select 'Add Credit Note'
Click on the View option of a Contribution and click on the 'Create Credit Note' button
Click on the Edit option of a Contribution and click on the create credit note button
Enter the credit note details and save. Note the credit note will automatically be populated with the equivalent line items of the invoice. If there is an amount partially paid on the invoice already these amounts will be pro-rata, but note that in some cases, due to rounding to the nearest 2 decimal places, the pro-rata amount may not add up to the balance on the invoice. This is to be expected and you can easily modify the amounts on the screen.
Fields:
Contact: The contact record of the credit note
Owner Organisation: The Legal Entity in CiviCRM from which the credit note is issued.
Date: The effective date of the credit note
Description: An optional public description that will be shown on the printed credit note. You can use this to add any details you feel important for the contact to be aware of.
Reference: An optional reference for the credit note
Currency: The currency of the credit note
Line items: The line items of credit
Comment: An optional internal comment that will not be shown on the printed credit note.
You will then be redirected to a screen to allocate credit
Enter the 'Amount to Allocate' to allocate credit on pending contributions
Click on '✔︎ Allocate Credit'
If you do not wish to allocate credit immediately
You may skip step 4 above if not allocating the credit right away, say for example if you want to hold the credit for a future invoice.
Go to the Credit Notes tab within the Contribution tab of a contact record
Click on the ... and select 'Allocate credit to invoice'
You will then be redirected to a screen to allocate credit (step 4 above)
How to create a credit note without a contribution
A credit note can also be created without any contribution. You may create a credit note that can be applied in future against one or more invoices.
Go to the Credit Notes tab within the Contribution tab of a contact record
Click on the Create New Credit Note button
Enter the credit note details and save
Action menu on a credit note
Go to the Credit Notes tab within the Contribution tab of a contact record
Click on the ... of a credit note
View: View the credit note details and any allocations made to the credit
Edit: Update the details on the credit note
Download PDF Document Credit Note: Download a PDF file of a credit note, which upon download gets saved on your device
Email Credit Note: Send the credit note via email with the credit note attached
Void: Null & void the credit note. This option is only activated for credit notes with no allocations (or where any previous allocations have been deleted) and should only be used when the credit note has not been “sent” or was created in error.
Allocate credit to invoice: Allocate the credit to the applicable credit note. If the credit has the full amount allocated then this option will be disabled for that credit note.
Record Refund: Record any cash refunds against the credit note (say if a refund is being made as part of issuing the credit)
Delete: Delete credit notes
nb. You must have appropriate permission to delete credit notes. Please contact your administrator if you cannot see this option.
Things that cannot be updated
The Owner Organisation and Number cannot be edited as it’s prefetched based on the organisation and the numbering set on the Companies configuration (see pre-requisite section)
Line items and existing allocations cannot be updated. Existing allocations can be deleted from the credit note. CiviCRM will then reverse the allocation from the relevant invoice in an accounting-compliant way.
Deleting credit note
You should not normally delete credit notes. Deleting a credit note will leave a gap in your credit note numbering and will mean that you are not VAT compliant if the organisation is VAT registered. Instead, you should use the “void” credit note if they have created a credit note in error to ensure a full transaction history for VAT compliance. If you do decide to delete a credit note, you may want to adjust the "next number in sequence" to match your requirements.