This guidance shows you how to create a credit note for a part paid invoice, meaning that you can write off the remaining amount of the original invoice. This can be used if you issue the invoice to the customer then negotiate a reduced payment.
Creating the Credit Note
To start, go to Sales > New Invoice > Select the customer > Add items to this invoice button. Using the fields here enter in:
- Quantity – 1.
- Description – Enter in a description such as ‘Credit for reduced payment on invoice #XX’.
- VAT Rate – select the VAT amount that applied to the invoice originally.
- Total – Enter in the total amount that you are writing off from the original invoice as a negative, i.e. -100.
The net rate and VAT amount will be reverse calculated. After that, just click Add Item.
Applying the Credit Note
The credit note has now been created and can be applied to the original invoice. To do that just go to Sales > Select the original invoice. At the bottom you’ll see an Apply Advanced Payment button within the payment details section. Using the dropdown box, select the credit note that you just created followed by clicking the Apply Advanced Payment button. The invoice will now be marked as fully paid and your accounts will be correct.