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Creating Credit Notes

This article will help you understand the functionality of Credit Notes and its inter-dependency with invoices and payments.

Rashmi Kashyap

7 May, 2020 - Updated 2 years ago

Introduction to Credit Notes

A credit note is an amount that must be paid back to the customer as credits on the invoice or as refunds.
Situations, when the customer will be given credits, are:

If there was a delay in the delivery of the product
If the wrong product was shipped
If there was an error in invoice pricing
If the customer returned the product
If the product was defective

When does Credit Notes come in the post-sales journey?

When the customer returns a product after it has been delivered or if there is a pricing error in the invoice, then monetary credit will be allocated to the customer’s account.

Benefits of Credit Notes:

Prevents the creation of negative invoices.
Create a credit note with a click from an invoice.
Apply credit towards partially paid or unpaid invoices, or create a refund payment.
Credit notes can be applied to multiple invoices.
Set up approval on credit notes to ensure that they are only extended after the supervisor’s approval.

Feature Availability and Limits

	Sales Starter	Sales Professional	Sales Enterprise	One Professional	One Enterprise
Feature Availability
Credit Notes			✓		✓
Taxes and Discount Availability
Group Taxes			✓		✓
Individual Taxes			✓		✓
Group Discount			✓		✓
Individual Discount			✓		✓

Did you Know?

The modules- Credit Notes, Delivery Notes, Receipt Notes, and Bills are a part of the Inventory Add-On Extension. You have to install this extension by going to Settings> Extension Store to use these modules.

List view in Credit Notes

List view sorts and lists all the CNs based on the last modified CN.

Columns in List view

The columns that are visible by default in the List View are :

Name- Displays the name of the CN.
Status- Displays the current status of the credit note.
Applied Credits- Displays the credit amount that is applied to the invoice.
Refund- Displays the credit amount that is paid back to the customer.
Available Credits- Displays the total amount left after all the credits are applied.

List actions

You can perform many quick actions such as Comment, Export, Print, Email, etc. on the credit notes in the list view.
To learn more about List View actions in Vtiger CRM, click here.

Ways of viewing Credit Notes’ records

Summary view

The Summary View is the view that appears when you click a particular record from the List View. The Summary View displays a collection of all the key information of the record.
Summary View can be divided into four sections. Each section has a particular functionality.

Summary View Actions
- Follow: You can follow any CN record to get updates on all the activities performed on that record.
- Tags: You can add tag names to the record to identify the record easily.
- Print: You can print the CN or save it as a PDF for future references.
- Duplicate: You can duplicate the current record and have all the details reflected into a new record.
- Delete: You can delete a record by clicking this button.

Credit Note Document

The generated Credit Note along with the template will be displayed here.

Do button

When you click on the Do button on the right-hand top corner of the Summary View, you will see the following:
- Reach out now-You can get in touch with the contact via Email, Call or SMS at the moment.
- Reach out later- You can schedule an email, event or task with the contact.
- Add or Create- You can add or create other modules related to the credit note.
- Share- You can share the CN as a link or as an attachment.

Widgets
- Activity-All the activities made on the credit note are displayed here. Here you can add comments related to the credit note.
- Analytics-You can view all the metrics related to the credit note in the form of charts, minilists, etc. You can also create new ones here.
- Sales Ops- All the related invoices will be displayed here.
- Payments- All the related payment records will be displayed here.
- Settings- You can change the template of the CN here.

Deep Dive view

You can view and edit all the information about the CN record by clicking the Deep Dive button in the Summary View of the record.

Important Fields in Credit Notes

Field name	Description
Name	Mandatory field Displays the name of the credit note.
Status	Mandatory field It is a drop-down that shows the present state of the credit note. Open: The credit note has a credit amount in it. Void: The credit note has some amount but will not be used. Partially Redeemed: Only a part of the credit has been applied to one or more invoices. Fully Redeemed: All the credit amount from the credit note is applied to one or more invoices.
Contact Name	Displays the name of the contact related to the credit note.
Organization Name	Displays the name of the organization for which the credit note is created.
Assigned to	Mandatory field Displays the user or the group to whom the credit note is assigned.
Terms and Conditions	Mandatory field A set of instructions that are defined by the seller on the credit note.
Item Name	Mandatory field The name of the product or service against which the credit note is created.
Quantity	Mandatory field The count of the products or service that was returned by the customer.

Note:

You cannot edit a partially redeemed or fully redeemed status as they are system generated status.
You cannot reopen a fully redeemed credit note.

How to Create a Credit Note

Listed below are the ways from which you can create a CN.

From Credit Notes’ List View

You can use the +Add Credit Note button to create a new CN. You can find it on the top right corner in the credit notes’ List View.
Follow the steps below to create a CN:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Click the +Add Credit Note button.
Fill in all the necessary details.
Click Save.

From Invoices

You can create a credit note through an invoice with the Do button.
Follow these steps to add a CN from do button in invoices:

Click the Menu icon.
Go to the Inventory tab.
Select the Invoices module.
Open any particular invoice.
In the Summary View, click the Do button on the right-hand side top corner of the screen.
Click the Add or Create button.
Click on Credit Notes.
Enter all the necessary details.
Click Save to create the CN.

This newly created CN would be linked and will be visible in the Summary View of the invoices’ record.

Credit Note Configuration

You can configure Taxes, Tax regions, Shipping Charges (if any) and Terms and Conditions from the
Settings > Inventory Management section. These actions are limited to the Admin role.
Refer to the Tax management article to learn how to set up Taxes and other Settings.

Tax regions: Taxes can be set based on a region. Regions are set up in the Tax Settings screen.

Currency: It is the same as the currency defined in the Deal. Credit Note’s Line item currency is the same as the record level currency.

Tax mode:

Group Taxes: If there are multiple products/services in the inventory, group taxes help in populating tax rates according to specific tax calculations.

Individual Taxes: You can enable this option while creating a credit note. You can apply taxes for individual items in a Credit Note by clicking the Configure button in the credit note.

Note: The default Tax mode is set based on the option set in the Tax Management page by the administrator. This can be overridden on a credit note level from the credit note Configuration pop up.

Price Books: Price Books allows you to define different prices for products and services. The prices of the items can vary anytime depending on the customers and their needs.

When a Pricebook is selected or changed, the system updates the unit prices of all line items based on the selected Price Book.

To know more about Price Books, click here.

Discounts
1. Group Discounts: Similar to Group Taxes, Group Discounts are applied to Products (or) Services on the credit note level.

Individual Discounts: Contrary to group discounts, Vtiger CRM provides an option to apply Discounts on an individual item based on its List Price.

Shipping Charges: Shipping Charges is the additional amount charged by the company’s sales team for shipping the product to the customer.

Adjustments: This option allows to round off the total amount to the next value or the previous value based on the decimal number.

Note: You can customize and add or remove fields by going to the Module Layouts and Fields under Settings.

Adding Line Item Records

You can add a new Line Item records like a new product/service or a new section in the existing CN by editing the Item Details block.
Follow the steps mentioned below to add Line item records:

How to add a new Product or Service

Follow these steps to add a product/service:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Click +Add Credit Note and fill all the necessary details.
Open the recently created CN.
Click the Deep Dive button in the Summary View.
Go to the Item Details block.
Click Add row.
Select the Product or Service.

Refer to the Credit Note configuration section in this document to understand Tax management, Price books, etc.

How to add a new Section

Follow these steps to add a section:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Select any particular CN.
Click the Deep Dive button in the Summary View.
Go to the Item Details block.
Click Add Section.

Note:

Invoices and Credit Notes are matched based on the organization they are linked to.
You can also create a credit note directly from invoices and apply the credit amount. To learn more about this, click here.

How to Apply Credit Amount on Invoices

Credit notes are of little use if they are not linked to invoices. If a customer has 2 or more invoices linked, you can use credits to all the invoices, partially or fully against the open invoices.
Follow these steps to apply the credit amount to an invoice:

Create a Credit Note.
Click the Menu icon.
Go to the Inventory tab.
Select the Invoices module.
Open the invoice record to which you want to apply the credit amount.
In the Summary View, click the Apply Credits button. A list of all the credit notes applicable to the current invoice will be displayed.
Select the credit note from which you want to apply the credit amount.
Enter the amount you want to apply to the invoice in the Amount to Credit field.
Click Apply. The credits will be applied to the invoice and the credit note will be linked to the invoice.

The credit note will be visible in the Sales Ops widget in the Invoices’ Summary View.

Important details:

The status of the credit note will be changed to ‘Partially redeemed’ or ‘Fully redeemed’ based on the credit amount you have applied on invoices. You can see the status in the Credit Notes’ List View.
A user without edit permission cannot apply credits.
A Credit Note is marked as closed if all the credits are applied to invoices.

Note: After applying the credits on an invoice, the following fields will be updated:

Applied Credits and Available credits fields in the credit note.
The Balance field in an invoice record.

How to Apply Refunds on Invoices

You can provide a refund to your customer from the credit note, provided there are no open invoices.
Follow these steps to provide a refund:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Open any CN record.
Click the Refund button on the top right corner of the Summary View.
Enter the amount you want to provide as a refund.
Enter the necessary details.
Click Save to finish the refund process.
- Click Save and Continue to provide more information.

A payment record will be created and linked to a credit note. It will be available in the Payments widget in the Summary View of the DN record.

Note:

The payments module must be installed before you process a refund. Go to Settings > Extension Store to install the payments' extension.
You can also refund the credits from Payment module > Payment to Customer.

To know more about Payments, click here.

If you have refunded partially, the available credits are reduced from Credit Note.
If you have refunded fully, the Credit Note record is closed.

Deleting a Credit Note

You can delete a record only if all the available credits are unused. If there are any invoice or payment records linked to CN, you need first to unlink them, and then perform the deletion action.

Follow these steps to delete a record:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Open any CN record.
Click the More button.
Click the Delete icon.

Note: If any invoice or payment record is unlinked from Credit Note, it will revert the applied credits.

Actions Possible on a Credit Note

You can perform the following actions on the Credit Note:

Share a Credit Note

You can share a credit note with a customer by sending a link to the credit note or by sending the credit note itself as an attachment.

As link

Follow these steps to share the credit note as a link:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Open any credit note record.
Click the Do button in the Summary View.
Select Share.
Click Share as link.
A mail compose window opens with the credit note link.
Enter the recipient's details and click Send.

As attachment

Follow these steps to share the credit note as an attachment:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Open any credit note record.
Click the Do button in the Summary View.
Select Share.
Click Share as attachment.
A mail compose window opens with the credit note attachment.
Enter the recipient's details and click Send.

Export

Follow these steps to export a credit note:

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
In the List View, Hover over any project task record to display the radio button on the left side.
Click the radio button.
Click the Export button.
Select any one of the following options:
1. Export Selected Records- This option will export only the selected record.
2. Export data in current page- This option will export the records on the current page.
3. Export all data- This option will export all the data in all the pages of the Exports module.

The exported record will be saved on your local system.

Follow these steps to print a credit note :

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Open any Project record.
Click the More button.
Click the Print button.
You can perform any of the below options:
- Edit & Export- You can edit the credit note and export it to your local system.
- Email with PDF- You can email the credit note record as a PDF to the contact.
- Print- You can print the credit note and keep a hard copy.
- Save as PDF- You can save the credit note as a PDF on your local system.

How to change the template of the Credit Note

There are two ways from which you can change the template of a credit note.

Follow these steps to change the template of a credit note from the Print Credit Note screen:

This is a temporary change only until the credit note is printed.

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Open any Credit note.
Click the More button.
Click the Print button.
Select the template you want from the list of all templates.
You can perform any of the below options:
1. Edit & Export- You can edit the credit note and export it to your local system.
2. Email with PDF- You can email the credit note record as a PDF to the contact.
3. Print- You can print the credit note and keep a hard copy.
4. Save as PDF- You can save the credit note as a PDF on your local system.

Follow these steps to change the template of the credit note from the settings widget:

This is a permanent change and will be applied to the credit note immediately.

Click the Menu icon.
Go to the Inventory tab.
Select the Credit Notes module.
Open any Credit note.
Go to the Settings Widget.
Click the Template applied drop-down.
Select the template of your choice.

Articles in this section

Creating Credit Notes

Table of Contents

Introduction to Credit Notes

Feature Availability and Limits

List view in Credit Notes

Columns in List view

List actions

Ways of viewing Credit Notes’ records

Summary view

Summary View Actions

Credit Note Document

Do button

Widgets

Deep Dive view

Important Fields in Credit Notes

How to Create a Credit Note

From Credit Notes’ List View

From Invoices

Credit Note Configuration

Adding Line Item Records

How to add a new Product or Service

How to add a new Section

How to Apply Credit Amount on Invoices

How to Apply Refunds on Invoices

Deleting a Credit Note

Actions Possible on a Credit Note

Share a Credit Note

As link

As attachment

Export

Print

How to change the template of the Credit Note

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