Learn how and when to give a credit note or delayed credit to customers.
Instead of a refund, some customers prefer getting a credit note they can use to reduce the balance on their next invoice.
There are a few ways to handle credit notes in QuickBooks. You can create a credit note to immediately reduce a customer's current balance. Or you can enter a delayed credit so they can use it in the future.
Here's more about the differences and how to apply them to customer transactions.
Note: If your customer simply wants a refund, here's how to return your customer's payment.
Learn the differences between credit notes and delayed credits
In QuickBooks, you can give credit using a credit note or delayed credit. Here are the key differences:
Credit note
- If your customer wants to immediately reduce their current open balance, use a credit note.
- Your customer can use their credit note as payment for an invoice. They can use all of their credit notes or a portion of it.
- You can apply a credit note when recording payment for a customer’s invoice.
- Credit notes impact sales reports, even if you don't apply them to invoices.
Delayed credit
- If you want to track a customer's credit for future use, and they don't want it to immediately affect their current open balance, use a delayed credit.
- Your customer can use their delayed credit to reduce the balance of an invoice.
- You can add delayed credits to future invoices as a line item.
- Unlike credit notes, delayed credits don't impact sales reports until you apply them to invoices.
Create and apply a credit note
Step 1: Create a credit note
- 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.
Note: If your customer has returned stock and you wish to update your quantity on hand, input the product as a line item within the credit note.
Step 2: Apply the credit note to an invoice
- Select + New.
- Select Receive payment.
- From the Customer dropdown, select the customer.
- In the Outstanding Transactions section, select the open invoice you want to apply the credit note to.
- In the Credits section, select the credit notes you want to apply.
Note: You won't see the credits section if you have not created the credit note. - For the open invoice in the Payment column, enter how much of the credit you want to apply.
- Leave the Payment method, Reference no, Deposit to, and Amount received fields blank.
- Fill out the rest of the form, including the Payment date.
- Make sure the total is correct after applying the credit note.
- When you're done, select Save and close.
Create and apply a delayed credit
Step 1: Create a delayed credit
- Select + New.
- Select Delayed credit.
- From the Customer dropdown, select the customer's name.
- Enter the details, such as the date and the amount.
Tip: You can create a custom credit service item so you can quickly add it to delayed credits as a single line item. - When you're done, select Save and close.
This saves the delayed credit. You can choose to apply it the next time you invoice the customer.
Step 2: Apply the delayed credit to an invoice
Keep in mind that adding a delayed credit to an invoice from a prior accounting period will affect that period's balances.
- Select + New.
- Select Invoice.
- From the Customer dropdown, select the customer. This opens a window with all open transactions for the customer, including invoices and delayed credits.
Note: If you don't see this, select the small arrow next to the invoice Balance Due. - Find the delayed credit and select Add. This adds the credit as a line item to the invoice.
- Fill out the rest of the invoice as needed.
- When you're done, select Save and close.
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Credit note customisation
Any customisations applied to the Standard template will be picked up by the credit note. To customise a credit note, edit the Standard template according to your needs.