Credit Notes

Credit notes are financial documents that represent an adjustment, correction, or refund against an invoice. They provide a formal record when you need to reduce the amount a contact owes, whether because of a billing error, a partial refund, a goodwill gesture, or a returned product.

When to Use Credit Notes

Credit Note vs Refund

In summary: Use a credit note when you need to adjust an invoice balance or create a credit for future use. Use a refund when the contact has already paid and wants money returned to their payment method.

Credit Note Lifecycle

Every credit note progresses through statuses:

Status Transitions

• Draft can transition to: Issued, Void

• Issued can transition to: Applied, Void

• Applied is a terminal status (no further transitions)

• Void is a terminal status (no further transitions)

Credit Note Numbering

Credit notes are auto-numbered sequentially per workspace in the format CN-00001, CN-00002, etc. The numbering uses a database lock to prevent duplicates. The sequence is continuous and cannot be manually overridden.

Creating a Credit Note

1. Navigate to Credit Notes in the sidebar.

2. Click New Credit Note.

3. Fill in the details:

   • Contact: Select the contact (from CRM).

   • Company: Optionally link to a company.

   • Invoice: Optionally link the credit note to a specific invoice. This is recommended when the credit note corrects a specific billing issue.

   • Reason: A brief description of why the credit note is being issued (e.g. "Billing error on line 3", "Goodwill discount for service interruption").

   • Notes: Optional additional notes.

4. Add line items:

   • Each line item has a description, quantity, unit price, and tax rate.

   • Line items represent the amounts being credited.

5. Review the totals:

   • Subtotal: Sum of line item totals.

   • Tax: Tax amount on the credited items.

   • Total: The total credit amount.

6. Click Save as Draft.

Issuing a Credit Note

Once you have reviewed a draft credit note and confirmed it is correct:

1. Open the draft credit note.

2. Click Issue.

3. The credit note status changes to Issued.

4. The issue date is recorded.

Issued credit notes can no longer be edited. If a mistake is found after issuing, void the credit note and create a new one.

Applying a Credit Note to an Invoice

An issued credit note can be applied to reduce the outstanding balance on an invoice:

1. Open the issued credit note.

2. Click Apply to Invoice.

3. Select the invoice to apply the credit to.

4. The credit amount is applied, reducing the invoice's outstanding balance.

5. The credit note status changes to Applied.

6. The amount_applied field is updated.

7. The applied date is recorded.

Ledger write on apply

Applying a credit note writes a payments row via PaymentLedgerService::record with payment_source = 'credit_note' and an external_reference derived from the credit-note id and application. The invoice's amount_paid recomputes from the ledger; if the total settled now meets or exceeds the invoice total, the invoice flips to Paid.

The write is idempotent on (payment_source, external_reference), so a second apply of the same credit-note application is a no-op rather than a duplicate ledger row. Voiding the credit note's application reverses the ledger row as a signed negative entry.

This is the only path that moves money against a concorbit-governed invoice without involving Stripe. AT-governed and QB-governed invoices refuse credit-note application via the same gate that protects payment recording, AT and QB own their paid state.

Partial Application

If the credit note amount is larger than the invoice's outstanding balance, only the outstanding amount is applied. The remaining credit is tracked in the amount_remaining field and can be referenced when creating future credits.

Amount Tracking

Voiding a Credit Note

To cancel a credit note that should not be honoured:

1. Open the credit note (must be in Draft or Issued status).

2. Click Void.

3. The credit note status changes to Void.

4. The void date is recorded.

Voided credit notes remain in the system for audit purposes but have no financial effect. Applied credit notes cannot be voided, if you need to reverse an applied credit, create a new invoice for the amount.

Editing a Credit Note

You can edit all fields of a credit note while it is in Draft status:

1. Open the draft credit note.

2. Make your changes to line items, reason, notes, etc.

3. Click Save.

Once a credit note has been issued, it cannot be edited. To correct an issued credit note, void it and create a new one.

Deleting a Credit Note

You can delete credit notes in Draft status. Deleting soft-deletes the record. Issued and Applied credit notes cannot be deleted, they must be voided instead to maintain the financial audit trail.

Credit Note Line Items

Credit note line items follow the same structure as invoice line items:

The tax calculation mirrors invoices: each line item's subtotal has the assigned tax rate applied, and the credit note total aggregates across all line items.

Linked Invoice

A credit note can optionally be linked to a specific invoice:

• When linked, the credit note is displayed on the invoice's detail view, showing the adjustment.

• The "Apply to Invoice" action defaults to the linked invoice.

• Linking is informational, you can apply a credit note to a different invoice than the one it is linked to.

Searching and Filtering

On the Credit Notes page:

• View credit notes with their status, amount, amount applied, and reason.

• Filter by status (Draft, Issued, Applied, Void).

Canvas Panels

The Billing module provides two credit note canvas panels:

• Credit Notes: List of credit notes with status, amount applied, and reason. Filters by contact or company when one is selected on the canvas.

• Credit Note Detail: Single credit note view with inline editing (for drafts) and workflow buttons: issue, apply to invoice, void.

Both panels are included in the Billing Workspace canvas template.

Common Workflows

Correcting a Billing Error

1. Identify the incorrect invoice.

2. Create a credit note linked to that invoice.

3. Add line items for the amounts that need correcting.

4. Issue the credit note.

5. Apply the credit note to the invoice.

6. If the invoice was overpaid, process a refund for the excess.

Issuing a Goodwill Credit

1. Create a credit note for the contact.

2. Add a line item describing the goodwill credit and its amount.

3. Issue the credit note.

4. Apply it to the contact's next invoice, or hold it as store credit.

Handling a Partial Return

1. Create a credit note linked to the original invoice.

2. Add line items for the returned items only.

3. Issue the credit note.

4. Apply it to the original invoice to reduce the outstanding balance.

5. If the invoice was already paid, either refund the difference or credit it toward a future invoice.

Audit Trail

Credit notes are auditable records. The audit system tracks:

• Who created the credit note.

• When it was issued, applied, or voided.

• All changes made while in Draft status.

This provides a complete paper trail for financial compliance and dispute resolution.