How to Create and Apply a Sales Credit Note

Sales Credit Notes are used to reduce or adjust a customer’s outstanding sales receivable after a Sales Invoice has already been issued. 

They are typically created when:

• Goods are returned by customers

• Billing errors need correction

• Post-sale adjustments (discounts or rebates) are granted

Instead of modifying the original Sales Invoice, a Sales Credit Note records the adjustment separately and can be applied to the invoice using the Knockoff feature.

Benefit: This ensures accurate audit records while maintaining the integrity of the original sales transaction. 

Prerequisites

• Customer record exists.

• The original Sales Invoice exists if the credit note references a previous invoice.

• Inventory items or service items have been created, if applicable.

• Pricing and tax codes are configured, if applicable.

• The user has permission to create Sales Credit Notes.

• Outstanding receivable transactions exist if the credit note will be applied through Knockoff.

Scenario:

A customer returns several defective items after a Sales Invoice has already been issued. Instead of modifying the original invoice, the company creates a Sales Credit Note to reduce the customer's outstanding balance.

The credit note is then applied to the related Sales Invoice using the Knockoff feature to offset the receivable.

Procedure 1: Creating a Sales Credit Note

1. In the navigation pane, go to Sales > Sales Credit Notes

• Note: If the Quick Create icon is enabled (the highlighted button in the red box), selecting Sales Credit Notes opens the new Sales Credit Note transaction form. Otherwise, the Sales Credit Note List opens.

2. From there, select the New button to create a new Sales Credit Note transaction.

2. Complete the required fields in the sales credit note header.

• Customer – Select the customer associated with the sales credit note.

• Date – Specify the date the Sales Credit Note is created or issued.

• Credit Note No. – Document number used to identify the Sales Credit Note.

You may also enter additional information if applicable:

• Reason – Specify the reason for issuing the sales credit note, such as returned goods, pricing adjustments, or billing corrections.

• Description – Enter a brief description of the credit note adjustment.

• Ref No. – Enter an additional reference number if required (for example, customer reference or internal document number).

• Location – Warehouse, branch, or business location associated with the transaction.

• Agent – Salesperson or account manager responsible for the transaction. 

• Project - Project code associated with the sales credit note, if applicable.

3. Under the Details tab, enter the returned item details:

• Stock Code – Stock code of the item.

• Description – Automatically populated with the stock name once the Stock code is selected.

• F.Desc – Additional details about the item if needed.

• QTY – Quantity of the item being returned or adjusted.

• UOM - Unit of Measure (e.g., pcs, boxes, liters).

• Unit Price - Selling price per unit of the item being credited.

• Disc – Any Discount applied.

• Tax Code - Tax code assigned to the sales credit note item, if applicable.

• WTAX Code - Withholding tax code assigned to the sales credit note item, if applicable.

4. If you want to offset the return against a Customer’s outstanding invoice:

• Go to the Knockoff tab.

• The system displays all outstanding receivable transactions for the selected customer.

• Select the invoice(s) to which the Sales Credit Note will be applied.

• Verify that the applied amount is correct before saving.

Note:

This step is optional. The Sales Credit Note can be saved first and applied to customer invoices later through the Customer Knockoff function.

5. Click Save to record the Sales Credit Note.

Procedure 2: Validation of Recorded Sales Credit Note

After saving, verify that:

• The Sales Credit Note is saved successfully.

• The Credit Note number is generated or displayed correctly.

• The totals reflect the entered quantities, pricing, discounts, and taxes.

• The Sales Credit Note appears in the Sales Credit Notes List.

• The Knockoff amount is correctly applied, if applicable.

Procedure 3: Editing a Sales Credit Note

1. Go to Sales > Sales Credit Notes, then select the Doc # of the Sales Credit Note that you want to update.

2. Once opened, make the required changes, then click Save. 

Procedure 4: Deleting a Sales Credit Note

1. In the Sales Credit Notes List View, identify the document you wish to delete. Hover your cursor over the document and right-click on it. Then click Delete to remove the transaction.

2. Verify that the Sales Credit Note no longer appears in the Sales Credit Notes List.

3. Preferred Method: If the Sales Credit Note is no longer required, click Cancel instead. This preserves the transaction history while marking it as inactive.

Application:

Sales Credit Notes can be used to:

• Processing product returns – Record returned goods and reduce the customer's outstanding invoice balance.

• Correcting billing errors - Adjust incorrect quantities, pricing, or tax calculations without modifying the original Sales Invoice.

• Applying post-sale discounts or rebates – Provide negotiated price adjustments after the invoice has been issued.

• Handling partial order cancellations – Reduce receivables when part of an order is cancelled after invoicing.

Important Notes:

• Editing and Deleting Transactions: Editing and deletion permissions may be restricted based on system configuration, organizational policy, or applicable regulatory requirements (such as CAS approval, where applicable). Ensure modifications and deletions follow your organization's internal policies and applicable regulatory requirements.
  
  System Scope: QNE Optimum