Credit Note and refunds

Accounting
1

@Glenn We raised four sales invoices and the monies have been received for all. There was an error on the original invoices so what we have done is created a new invoice for the correct amount and then we want to enter credit notes to cancel out the four original invoices. The system is trying to refund the money through the bank account but what we will be doing is refunding the difference to the client. How do we allocate the credit notes against the new invoice to leave the new invoice as overpaid until we pay the customer back?

Thanks

2

Hi @OvidiuS

When you create a credit note for your sales invoices (the 4 incorrect ones), you’ll be presented with two options - either refund the money, or hold on the client’s account.

If you select the option to hold on the client’s account, then this will sit as a prepayment:

For example, I’ve got 4 dummy invoices, all for the same amount. I’ve marked these as paid, and then gone on to create credit notes, and hold funds on the client’s account:

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And on the client’s account:

I’ve also got a 5th invoice, which is for a slightly lower amount of £6,300.00. If I go into this invoice I can then mark it as paid from their credit:

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This leaves £60.00 sat on the client’s account as a prepayment. You can then either pay this against a future invoice (using the same ‘log payment’ method as above), or you can refund it. There’s a short guide to this here. The guide is for suppliers, but the concept is the same for clients.

Hope that helps

3

You can only “hold funds on account” if you create a credit note from an existing (paid) invoice. If you’re trying to create one single ad hoc credit note (i.e. a brand new negative value invoice) for the full value of the four invoices then you’ll only get the option to refund from a bank account.

4

All done & dusted - thanks again!

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