You need to enable first the Automatically apply credits feature in QuickBooks Online (QBO) to issue a credit note, Jane.
Here's how to turn it on:
- Log in to your QuickBooks Online (QBO) account.
- Go to Settings and select Account and settings.
- Select the Advanced tab.
- Select Edit ✎ in the Automation section.
- Turn on Automatically apply credits if you want to automatically apply credits to customer balances or open invoices.
- Select Save, then Done.
Please see the screenshot for reference:

Next, you can now create a credit note. Let me show you how:
- Select + New.
- Select Credit note.
- From the Customer dropdown, select the customer's name.
- Enter the credit note details, such as the date and the amount.
- Tip: You can create a custom credit service item so you can quickly add it to credit notes as a single line item.
- When you're done, select Save and Close.

If you are ready to apply the credit note to an invoice, you can visit this article and please follow the step 3 procedure: Create and apply credit notes or delayed credits in QuickBooks Online.
For future reference, I've added this resource about handling your sales transactions in QBO: Customise reports in QuickBooks Online.
Please add your reply below if you need further assistance regarding your credit note.