Issuing credit notes: what, when and how?
Every entrepreneur encounters it sooner or later: you send an invoice and only afterwards you realise that you have made a mistake or that something needs to be changed. Enter: the credit note! Because you can't just modify your invoice and send it out again. And you certainly can't delete them from your accounts. You have to draw up a credit note and send it to your customer. We explain briefly what a credit note is, when you should send one and how you should draw it up.
What is a credit note?
A credit note, also known as a credit invoice, is an invoice with which you correct an earlier sent invoice. In other words, you use a credit note to waive (part of) an invoice amount. Because it is a negative amount, you state this amount with a minus sign on the document.
This way, you put the waiver on paper and your customer officially knows that he does not have to pay this amount anymore. If your customer has already paid the initial invoice, you must repay the amount of the waiver. You only do this after you have sent the credit note. If your customer agrees, you can also choose to keep the waived amount for a future purchase.
When should I issue a credit note?
You should create a credit note if you want to or have to make any changes to an invoice, for example
- if you made a mistake on the initial invoice
- if you want to add something to the invoice, such as a volume discount or a payment discount for early payment
A less common reason - but certainly an equally good one! - is to write off an unpaid invoice. You may ask: why would you do that? When a customer has been declared bankrupt or is in court, you know that you can no longer expect a payment. By waiving the debt, you can recover the VAT and you do not have to pay taxes on it. Please note: this is only possible if you can demonstrate that you can no longer take other steps to collect your invoice.
We therefore advise you to first try a collection procedure to collect the full invoice amount. Unpaid can help you with this. If you would like to know more, schedule an information session at a time that suits you without obligation:
What requirements must a credit note fulfil?
A credit note looks basically the same as an invoice. The main difference is that the amount stated on a credit note is always negative. In addition, you should put 'credit note' at the top instead of 'invoice'.
Just as an invoice has an invoice number, you add a number to your credit note. You don't have to enter a separate number, but can have the credit note number follow your invoice numbers:
| 1 | Invoice | 2022/0001 |
| 2 | Credit note | 2022/0002 |
| 3 | Invoice | 2022/0003 |
You also always refer to the invoice to which the credit note relates: for example, with the statement 'Crediting of invoice 2022/0001'. If VAT is applicable to your credit note, you also state: 'VAT to be refunded to the State to the extent that it was originally deducted'.
These details also belong on your credit note (just like on an invoice):
- The address details and company number of you and your customer
- Your account number and payment details
- The date of dispatch
- The total amount of the refund (excluding and including the correct VAT percentage)
- The reason for sending the credit note
Would you like some more information ? Feel free to call us at +32 9/396.34.00 or email us at info@unpaid.be.