A credit note, also known as a credit memo or negative invoice, allows you to correct a previously sent invoice by billing a negative amount. This can range from the entire invoice amount to just a small portion of it. By documenting the reduction or waiver that is required on paper, you are formally informing your debtor that the amount in question is no longer owed, and you ensure that your own accounting remains accurate.
A credit note largely resembles a standard invoice and therefore must meet the same requirements. Each credit note is an official document with its own invoice number, forming part of your business records. There are only two important additional conditions: the amount is always preceded by a minus sign, and the credit note must always refer to the original invoice. Therefore, it is crucial to always retain your initial invoice as well, even if it contains an error.
"},"alignedImage":{"transformBaseUrl":"https://assets.ing.com/transform/7f3261f7-017b-4b74-8ad0-d45158351381/Mature-man-laughing-to-camera-in-his-workshop","original":"https://assets.ing.com/m/3e9517f0620a2fea/original/Mature-man-laughing-to-camera-in-his-workshop.jpg","extension":"jpg"}},{"componentType":"sectionTitle","title":"When should I issue a credit note?"},{"componentType":"paragraph","richBody":{"value":"Sending out a faulty invoice happens to the best business owners. Unfortunately, once an invoice has been finalized, you cannot simply adjust or remove it from your accounting records. In the following cases, you should prepare a credit note and provide it to your customer:
Important: you may only issue a credit note as long as the original invoice has not yet expired.
"}},{"componentType":"sectionTitle","title":"Credit notes for uncollectible invoices"},{"componentType":"paragraph","richBody":{"value":"An exceptional reason to issue a credit note is an uncollectible invoice. If your debtor refuses to pay an invoice or goes bankrupt, you may still be required to pay taxes on income you never actually received. In order to reclaim the VAT you paid to the Treasury, you must draw up a credit note and send it to the co-contractor. Based on this credit note, he can repay the VAT amount he has already deducted to the Treasury.
"}},{"componentType":"sectionTitle","title":"How do I create a credit note?"},{"componentType":"paragraph","richBody":{"value":"As mentioned, a credit note is not much different from a regular invoice. In addition to the standard details of your company and your customer, the amount and the VAT rate, the following elements should be mentioned on any credit note:
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