How to create a Credit Note in QuickBooks?

Software: QuickBooks Desktop accounting

Credit Note is a document issued from the seller to the buyer for goods returned or credit for overstated in sales value.

QuickBooks Credit Memo

For QuickBooks Desktop accounting, the Credit Memo (a.k.a. Credit Note) is under the Customers menu (Create Credit Memo/Refund). Credit Memo is using the same sequential number as the Sales Invoice. For example, if the last sales invoice number is 1234, then the next Credit Memo number is 1235. Some accountant may like to have a unique sequential number for the Credit Memo, such as using a prefix to tag the Credit Memo (CN2001, CN2002, etc.); by doing so, the following Sales Invoice number will continue from the Credit Memo saved. For example, if the Credit Memo is CN2002, then the next Sales Invoice will continue as CN2003, you have to change the invoice number manually to keep it consistent.

QuickBooks Discount and Credit

Similar to the Sales Invoice, you cannot use a General Ledger account directly in Credit Memo. Consider creating an Other Charge item and associate it to the relevant income account from the item list and use it in Credit Memo if the credit is not about goods returned. You do not need to enter a negative value for the credit amount, QuickBooks will credit the accounts receivable and debit the relevant income or inventory account automatically. You have an option of retaining it as a credit to offset against future invoices, give a refund, or offset with the existing outstanding invoice when the Credit Memo saved.

QuickBooks is a simple, easy to use accounting system for small businesses; it has both Cloud-based (QBO – QuickBooks Online) and a Desktop version for those who prefer to keep their accounts locally. Sign up a free QuickBooks demo to find more on how to use QuickBooks to manage your business finance.

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