Credit notes and refunds

When a customer returns a product or you need to adjust a charge, you don't delete the original invoice — you create a credit note. A credit note is the accounting-correct way to reverse all or part of an invoice. It keeps your records clean and your audit trail intact.

When to use a credit note

• Full return — customer returns a product for a complete refund
• Partial return — customer returns one item from a multi-item order
• Price adjustment — you overcharged and need to issue a correction
• Warranty claim — replacing a defective product and refunding the original

Creating a credit note

1. Go to Accounting → Customers → Invoices and open the original invoice.
2. Click Credit Note (you'll find this under the invoice actions or as a button at the top — it's only available on confirmed or paid invoices).
3. A dialog appears with options:
   • Credit Method:
     • Partial Refund — creates a draft credit note you can edit (change quantities, amounts)
     • Full Refund — creates and confirms a credit note for the full invoice amount automatically
     • Full refund and new draft invoice — reverses the original and creates a new draft invoice (useful if you need to re-issue with corrections)
   • Reason — add a note like "Customer return" or "Price adjustment" for your records
4. Click Reverse.

Partial refund example

Say a customer bought a Glock 19 ($549.99) and 3 boxes of Federal 9mm ($12.99 each) on one invoice. They return two boxes of ammo but keep the firearm and one box.

1. Open the original invoice and click Credit Note.
2. Select Partial Refund and click Reverse.
3. A draft credit note opens with all the original line items.
4. Remove the lines you don't need to refund (the Glock and one box of ammo).
5. On the remaining ammo line, change the quantity to 2.
6. Click Confirm. The credit note is posted, reducing the customer's balance by $25.98.

Issuing the actual refund

A credit note reduces what the customer owes, but it doesn't automatically send money back to their card or bank account. You have two options:

• Apply it to a future invoice — the credit sits on the customer's account and is applied automatically to their next purchase
• Refund to their payment method — if they paid by card through NMI or Authorize.net, you'll process the refund through the payment provider. See the Payment Processing book for details on card refunds.