How to Create and Apply a Customer Credit Note

Modified on Mon, Jun 29 at 5:47 PM

Customer credit notes are issued to correct overbilling, process returns, or apply agreed-upon discounts. In QNE Optimum, recording a Customer Credit Note properly helps keep customer balances accurate, correct sales records, and reflect adjustments in financial statements.

Prerequisites

Customer record exists.
The original invoice exists if the credit note references a previous transaction.
General Ledger accounts are configured.
Tax codes are configured, if applicable.
The user has permission to create Customer Credit Notes.

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

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

Customer – Select the customer who will receive the credit adjustment
Date – Specify the date the Customer Credit Note is created or issued.
CN # – Unique Customer Credit Note number assigned by the system.
Reasons – Specifies the reason for issuing the credit note, such as overcharging, billing corrections, service cancellation, or customer discounts.
Description – Brief explanation of the credit note, such as "Sales Returns," "Overbilling Adjustment," "Service Credit," or "Customer Rebate."
Ref No. – Additional reference numbers, such as a contract number, service agreement number, customer complaint reference, or internal document reference.
Agent – Salesperson or account manager responsible for the transaction.

Acc Code – General Ledger account code where the credit adjustment will be posted.
Account Name – Description of the selected General Ledger account.
Description – Additional explanation of the adjustment or credit being issued.
Reference No. - Reference number associated with the individual account line, if applicable.
Amount – Amount being credited back to the customer.
Tax Code - Tax code assigned to the customer credit note item, if applicable.
WTAX Code - Withholding tax code assigned to the customer credit note item, if applicable.

Go to the Knockoff tab.
The system displays all outstanding receivable transactions for the selected customer.
Select the invoice(s) to which the Customer Credit Note will be applied.
Verify that the applied amount is correct before saving.

Note:

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

After saving, verify that:

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

In the Customer 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.

Verify that the Customer Credit Note no longer appears in the Customer Credit Notes List.
Preferred Method: If the Customer Credit Note is no longer required, click Cancel instead. This preserves the transaction history while marking it as inactive.

Customer Prime Office Supplies was billed ₱15,000, but a duplicated item worth ₱3,000 was later identified.

Steps to issue a credit note:

The credit note is now linked to the invoice and records the adjustment against the customer's outstanding balance.

Application:
Customer Credit Notes can be used to:

Overbilling Corrections
A customer was billed for an incorrect quantity or duplicate item. A Customer Credit Note reduces the amount owed without modifying the original invoice.
Product Returns
A customer returns goods after invoicing. A Customer Credit Note records the value of the returned items and adjusts the customer's balance.
Customer Rebates and Discounts
A business grants a post-sale discount or rebate that was not reflected on the original invoice.
Service Cancellations
A service is canceled after invoicing, requiring part or all of the billed amount to be credited back to the customer.
Applying Credits to Future Invoices
Customer Credit Notes can be retained and later applied against outstanding or future customer invoices using Customer Knockoff.

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