Credit notes and refunds in AccBooks AI

What is a credit note?

A credit note is a document that cancels all or part of an invoice. You issue a credit note when:

• Goods are returned.
• An invoice was raised in error.
• A discount or adjustment is agreed after the invoice was sent.
• You’re writing off a bad debt.

Credit notes must mirror the original invoice’s VAT treatment and nominal code allocation.

Creating a credit note

Option 1 — From an existing invoice

1. Open the original invoice in Invoices.
2. Click Issue credit note.
3. AccBooks pre-populates the credit note with the same line items and amounts.
4. Adjust quantities or amounts if it’s a partial credit.
5. Enter a reason for the credit note (for your records and for the customer).
6. Click Issue credit note.

The credit note is linked to the original invoice and reduces the outstanding balance automatically.

Option 2 — Standalone credit note

1. Go to Invoices → New credit note.
2. Select the customer.
3. Add line items (negative amounts).
4. Issue the credit note.

Use standalone credit notes when you’re crediting something not on a specific invoice (e.g., a goodwill gesture or volume discount).

Credit note numbering

AccBooks assigns credit note numbers automatically in sequence (e.g., CN-0001, CN-0002). These are separate from invoice numbers. You can configure the prefix under Settings → Sales → Numbering.

Sending a credit note

Like invoices, credit notes can be emailed to the customer directly from AccBooks with a PDF attachment. The customer receives it with a clear credit note header.

Applying a credit note to an invoice

After issuing, you can apply the credit note to an outstanding invoice:

1. Open the credit note.
2. Click Apply to invoice.
3. Select the invoice(s) to apply it against.
4. If the credit is less than the invoice balance, the invoice remains partially outstanding. If more, the excess becomes a credit balance on the customer’s account.

Processing a refund

If you’re returning money to the customer (rather than just reducing the outstanding balance):

1. Issue the credit note as described above.
2. Go to Bank feeds and find the refund payment in your bank account.
3. In the reconciliation queue, match the payment to the credit note using Match to credit note.

This posts:

• Debit: Sales return (or the original nominal code)
• Debit: VAT (reverses the original VAT)
• Credit: Bank account

Bad debt write-off

If a customer will never pay an invoice:

1. Open the invoice.
2. Click Write off as bad debt.
3. AccBooks issues a credit note, posts the bad debt to a write-off account (usually code 8100) and reclaims the VAT as bad debt relief on the next VAT return (if the invoice is more than 6 months old).

Customer credit balance

If a credit note results in a credit balance on the customer’s account (you’ve credited more than they owe), you can:

• Apply it to a future invoice.
• Refund it via bank transfer and reconcile in AccBooks.
• Leave it as a credit on their account.

View all customer account balances at Customers → [customer] → Account summary.