Running a business
Maрго Овсієнко, 2014-05-22
A Credit Note is a document type issued to correct an error which has been made in a sales invoice that's been processed and sent to a customer. Each invoice may be corrected and it is the only proper form of accounting interference. Any type of annotations or corrections on the invoice are not acceptable.
Reasons for issuing a Credit Note:
- Price error: For instance, you have issued an invoice for the amount of $500, where the correct item price was $600. You then issue a Credit Note for the amount of $100 to your customer.
- Short shipment of goods: Customer has been invoiced 10 units, but only 9 of them were shipped. You issue a Credit Note to credit your customer for the shortfall of 1 unit.
- Applying a discount after the invoice has been issued: If you have decided to give your customer a discount after the original invoice has been generated, you may issue a Credit Note with the correct amount after the discount.
- Faulty products or rejected products: In a case of faulty or rejected products, you may issue a Credit Note for the returned goods to correct your Warehouse inventory.
- Price increase: If the price of your product has increased due to certain circumstances, you may issue a Credit Note in order to match the previously charged amount with the current.
- Wrongly shipped products: For instance if you have wrongly invoiced and shipped Product A when the correct item was Product B, you are required to ship Product B along with a Credit Note for Product A as well as another invoice for Product B. That way your Warehouse inventory will be correct.
- Customer short payments: You send your client an invoice for the amount of $200, however, the client only pays $150. You then may issue a Credit Note for the remaining $50 to write-off the shortfall amount.
InvoiceOcean - news
Running a business
Freight Industry in the US needs Better Invoicing Standards
Invoicing is a process that takes some effort and standardization in order for companies to function effectively for the long term. It is good to stick with one standard in terms of what is expected on an invoice, the payment to be delivered by the due date, and for companies to be able to follow their invoices (knowing which were paid and when for instance) for the long term with their clients.
Mike Lata (aka Maciej Duraj)
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