Business Documents
Issue a credit note that cancels or reduces a previously issued invoice, keeping your numbering intact and your books auditable.
Overview
This free credit note generator corrects an invoice you have already sent. Name the invoice, say why, credit the whole amount or specific items, and download a document that reduces what the customer owes without touching the original.
That last part is the point. Once an invoice has left your hands it is a record, and records are corrected by adding to them rather than by editing them. Changing a sent invoice means two versions exist with the same number and nobody can tell which is real; deleting it leaves a gap in your numbering, which is precisely the shape a removed invoice makes.
A credit note avoids both. It carries its own number, points at the invoice it reduces, states the reason, and reverses the tax that was charged. The mistake and the correction both stay on the record, which is what makes the books defensible rather than merely tidy.
The tool warns rather than blocks. Issuing a credit note with no invoice reference or with tax left off is legal and awkward to reconcile later, so it tells you and lets you decide. Nothing is uploaded — the document is built in your browser and never transmitted.
Step by step
Enter the original invoice number and date, and why the credit is being issued. Without the invoice number the credit note cannot be reconciled.
Credit a stated amount to cancel or reduce the invoice, or list specific items for a partial return. Use the tax rate the original invoice charged.
Check the warnings, then save it as a PDF and send it to your customer alongside a note of how the credit is being settled.
Background
A credit note is a document saying that the amount owed on a specific invoice is reduced by a specific sum, and why. It is issued by whoever issued the invoice, it carries its own reference, and it is never a request for payment — it moves the balance in the other direction.
Calling it a negative invoice is a useful shorthand and a poor description. An invoice creates a debt; a credit note reduces one that already exists, which is why it cannot stand alone. Without a reference to the original nobody can tell what was reduced, whether it was reduced twice, or whether the invoice it relates to was ever paid.
The numbering is where the distinction becomes practical. Credit notes need their own unbroken sequence, separate from invoices, because taking a number out of the invoice series leaves a hole where an invoice should be. A gap in invoice numbering is the single thing an audit looks for hardest, since it is what a quietly deleted invoice leaves behind.
Tax is the part most often got wrong. A credit note does not charge tax — it reverses tax already charged, at the rate that applied on the original invoice rather than the rate in force today. Getting this wrong costs money in both directions: crediting at a new rate after a change leaves the books out by the difference, and leaving tax off entirely means the seller has paid over tax on a sale that did not happen and never reclaims it.
Finally, a credit note is not a refund. It records that money is owed back; whether it moves depends on what you agree. It can be refunded, held on account, or set against the next invoice, and saying which on the document prevents the most common follow-up question this document generates.
Reference
Most of these mirror an invoice, and the two that do not are the two that make the document work. A credit note missing its reference or its tax line is the one that causes trouble months later.
The original invoice number
The field this document exists to carry. Without it the credit cannot be matched to anything, and neither you nor your customer can tell whether the same invoice has been credited twice. Include the original's date alongside it.
Required
Its own credit note number
From a separate sequence, not the invoice series. Taking a number from the invoice run leaves a gap that looks exactly like a deleted invoice, which is the situation this whole document is designed to avoid.
Required
The words 'credit note'
Prominently, because the rest of the layout is identical to an invoice and a hurried accounts-payable clerk will file it as one and pay it. Stating in words that it reduces rather than requests is worth the line it takes.
Required
The amount credited
Net, tax and total, laid out the same way as the invoice so the two can be compared line by line. Enter the figures positive — the document declares the direction, and typing minus signs into every field is how a sign ends up wrong.
Required
The tax reversed
At the rate the original invoice charged, shown separately. This is what allows you to reclaim tax you have already paid over on a sale that has now been reduced, and leaving it off means that money is simply lost.
Required
The reason
Goods returned, invoiced in error, overcharged, order cancelled. Different reasons have different consequences for stock and for tax, and a credit note with no reason is the one that generates a question nobody can answer six months later.
Required
Both parties' details
Yours and the customer's, matching the original invoice. If your tax registration number appears on invoices, it belongs here too — a credit note carrying a tax adjustment usually has the same requirements as the invoice it corrects.
Required
The issue date
When the credit note was raised, which is not the invoice date and often not the date the goods came back either. It determines which period the adjustment falls into, so it matters at a year end.
Required
How the credit is settled
Refunded, held on account, or offset against the next invoice. Not always required, and it prevents the most common follow-up — a customer waiting for money you were crediting instead.
Optional
Which items are affected
For a partial credit, the specific lines rather than a lump sum. Three items returned out of eleven is much easier for both sides to reconcile when the three are named.
Optional
Who it helps
The immediate instinct is to fix the original and resend it. A credit note is barely slower, and it leaves you with a defensible record instead of two documents sharing a number and a conversation about which one counts.
Returns are routine and each one reduces a sale that has already been invoiced and reported. Crediting properly is what keeps stock, revenue and tax agreeing with each other at the end of the quarter.
A goodwill reduction for a missed deadline, or a project cut short after invoicing. Both are credits rather than edits, and handling them as documents rather than conversations avoids an awkward reconciliation with an accountant later.
A credited sale means tax already declared can be adjusted, but only against a document that shows the reversal at the original rate. Without the credit note the tax stays paid, which is a real and avoidable cost.
Clients arrive having deleted invoices or edited sent ones, and the reconstruction is slow. A client issuing credit notes correctly is a client whose year end takes a fraction of the time.
Scope changes after invoicing are normal, and some of them reduce the bill. Recording the reduction against the specific invoice keeps project profitability honest rather than quietly rewriting history.
Do it properly
Once it has left your hands it exists in someone else's records too. Correct it with a credit note so the original stays intact, the sequence stays unbroken, and the change is visible to anyone who looks.
A credit note without a reference cannot be matched to anything, and the risk is not theoretical — an unreferenced credit is the one that gets applied twice, or not at all, because nobody could tell which invoice it belonged to.
Number them from their own run, commonly with a CN prefix. Borrowing a number from the invoice series leaves a hole in it, which is the exact pattern a deleted invoice makes and the first thing an audit questions.
Use the rate the invoice charged, not the current one. After a rate change the two differ, and crediting at today's rate leaves your tax account out by the difference on every affected sale.
A lump sum is quicker to type and much harder for either side to reconcile. Naming the items lets your customer match the credit to what they sent back and prevents a second query about the difference.
Refund, credit on account, or offset against the next invoice. Leaving it unsaid is the most common reason a credit note generates a follow-up, usually from a customer waiting for money that was never going to move.
Credit notes raised months later fall into a different accounting period and complicate both sides' books. Issuing in the period the reduction was agreed keeps the correction next to the thing it corrects.
Avoid these
Editing an invoice that has already been sent
Issue a credit note instead. Your customer already holds the original, so editing yours creates two documents with one number and no way to tell them apart — and whichever surfaces later, somebody has to account for the difference.
Deleting an invoice that was raised in error
Credit it. Deleting leaves a gap in the numbering, and a missing invoice number is exactly what a removed invoice looks like. Crediting keeps both the error and the correction on the record, which is what makes it defensible.
Numbering the credit note from the invoice sequence
Use a separate series. Borrowing a number leaves a gap in the invoice run and makes the two documents indistinguishable in any list sorted by reference.
Leaving the tax off the credit note
Reverse it explicitly. Tax already declared on the original sale can only be adjusted against a document showing the reversal, so omitting it means paying tax on revenue you did not keep.
Crediting at today's tax rate rather than the original's
Use the rate the invoice charged. Where a rate has changed between the invoice and the credit, the difference lands in your tax account and has to be found and explained later.
Issuing a credit note with no invoice reference
Always name the original. An unreferenced credit is the one that gets applied to the wrong invoice, applied twice, or left unapplied — and none of those is discovered quickly.
Assuming a credit note means a refund is coming
State the settlement on the document. A credit can be refunded, held on account or offset against the next invoice, and saying which prevents a customer chasing money you were never sending.
FAQ
The Credit Note Generator is at the top of this page — free, no signup, nothing uploaded.
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