Free Credit Note Template
A credit note reduces or cancels an amount owed on a previous invoice — issued for a return, an overcharge, or a billing correction.
Create your credit note now
Fill in your details on the left, watch it build in real time on the right, then download as a PDF — completely free, no account needed.
| Description | Qty | Price | Tax % | Total |
|---|
Nothing you type here is uploaded anywhere — your invoice is built entirely in your browser.
A credit note reduces or cancels an amount owed on a previous invoice — issued for a return, an overcharge, or a billing correction. It should always reference the original invoice number it corrects, since a credit note that stands alone with no clear link back is a common source of bookkeeping confusion for both sides.
What to include on a credit note
- Credit note number
- Reference to the original invoice number
- Reason for the credit
- Itemized adjustment (full or partial)
- Credit amount
- Whether it’s a refund or applied to a future invoice
How to issue a credit note
- Reference the original invoice — number and date — in the notes.
- Give the credit note its own number (e.g. CN-0007); never reuse or edit the original invoice number.
- List what’s being credited — the returned items, the overcharged amount, or the cancelled service.
- Show the tax being reversed on credited items, at the same rate as the original invoice.
- State how the credit will be used — refunded, applied to the outstanding balance, or held against future invoices.
When to issue a credit note
- The customer returned goods or some goods arrived damaged.
- You overcharged — wrong price, wrong quantity, duplicate line.
- A discount or rebate was agreed after invoicing.
- A service was cancelled or only partly delivered.
- An invoice was issued in error and needs cancelling.
Why not just edit the invoice? Once an invoice is sent, it’s part of both sides’ accounting records — and in VAT/GST systems, issued invoices generally mustn’t be altered or deleted. A credit note corrects the record transparently.
Credit note example
Credit note vs debit note vs refund
| Document | Effect |
|---|---|
| Credit note (credit memo) | Reduces what the customer owes |
| Debit note (debit memo) | Increases what the customer owes, or is issued by a buyer to request a credit |
| Refund | The actual return of money — often following a credit note |
Frequently asked questions
What is a credit note?
A document issued by a seller to reduce or cancel an amount on a previous invoice — for returns, overcharges, discounts or cancelled services. It references the original invoice.
Is a credit note the same as a refund?
No. A credit note records that the customer owes less; a refund is the money actually paid back. A credit can also be applied to future invoices instead of refunded.
Can I just delete the wrong invoice?
It’s better practice — and in VAT/GST systems usually required — to issue a credit note rather than delete or edit an invoice that’s already been sent.