Preparing credit notes is a process which many businesses will need to do, for their own and their customer’s records. Credit notes vary in their content and style and there is no set standard. However, the style of a credit note issued by a business is usually very similar to their invoices.
A credit note is a document which is sent by a business to its customers - it shows the customer the amount to be paid has been reduced.
It can be issued if for example a customer:
The credit note should be checked by the customer, along with the calculations.
A credit note is issued to customers when:
A credit note can be issued on paper or electronically.
The following pieces of information should appear on any credit note you issue:
|The details of the business issuing the credit note||This includes the company name, address, phone number and email address.|
|VAT registration number||If the business is VAT registered, their unique VAT registration number must be shown.|
|The customer’s name and address|
|Credit note number||This must be unique and must follow on from the last credit note.|
|Account number||The account is the business’s reference for their customer|
|Your reference number||The reference number relates to a purchase order (a reference could also be included for a delivery note).|
|Date / Tax point||The date or tax point (also known as the time of supply) will often be the same, but if not the two dates should be clearly shown.|
|A clear description of each type of goods or services returned||The unit price, quantity, rate of VAT and rate of discount should be shown clearly for each item. Also show the total amount (excluding VAT) for each item, and the currency.|
|Goods total||The net total of all goods or services credited, VAT and total including VAT.|
|An explanation as to why a credit note has been issued||For example incorrect price, incorrect item, incorrect quantities.|
Copies of credit notes should be kept for at least six years. They can be stored electronically.
The step-by-step guide takes you through:
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