Tag Archives: Credit Note

How to record a credit note?

Software: MoneyWorks accounting software

MoneyWorks uses the reverse sales invoice (negative invoice) method to record a credit note. It converts the sales invoice into a credit note by clicking on the reverse button on the sales invoice transaction.

Upon converting, it changes the quantity into a negative value, multiplying the unit price to derive a credit amount (negative) if you are using products or services (A negative net amount if you are using a ledger account instead). Of course, you can also manually enter a negative quantity instead of clicking the reverse button to create a credit note.

Credit Note (a.k.a. Negative Invoice)
Credit Note

The credit note debits the sales and credit accounts receivable, which later offset the outstanding invoice.

You have an option of offsetting the credit note with an invoice from the Command menu (via a contra method) or when receiving payment from the customer. Both work, but offset during received payment is preferable (The contra feature is not for contra between a creditor and a debtor owing, but the credit note and outstanding invoice of the same debtor).

Credit Note (a.k.a. negative invoice) shared the same running sequent number as the sales invoice. You may manually change the reference number but try keeping the system-generated number to reduce confusion or mistake.

You can use the invoice form to print the Credit Note by amending the formula of the form tile from a simple text field to an if( ) statement:

if(Transaction.gross < 0, “Credit Note”, “Invoice”)

It prints as a ‘Credit Note’ when the invoice gross is smaller than $0 and ‘Invoice’ when it is $0 or greater. It helps reduce the number of forms you require to manage, ease the operation and reduce mistake made.

MoneyWorks, as a hybrid system, allows sharing of data in the cloud and uses its feature-rich desktop app. Book a demo to find out how to use MoneyWorks to manage your business finance.

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.

Contra QuickBooks’ Credit Memo with Sales Invoices

Software: Intuit QuickBooks Desktop accounting software

Credit Memo (aka Credit Note or Adjustment Note) is an accounting document given by the seller to the buyer for goods or services returned. A refund of the credit amount can be given or offset against the future purchase.

Use the “Create Credit Memo/Refund” feature in QuickBooks to record the return of goods/services from a customer. QuickBooks gives the user an option to retain as an available credit to offset against the future purchase, give a refund immediately, or apply to an invoice when the credit memo saved. Among the three options, “Retain as an available credit” is most commonly used.

quickbooks-credit-memo

“Retain as an available credit” is use to contra the credit memo against the future purchases. Let’s say you have issued a credit memo and some invoices for a customer. When making payment, the customer can opt to apply the credit memo to the outstanding sales invoices. In the QuickBooks’ Receive Payment transaction, click the “Discount & Credit” button after you have highlighted the sales invoice and apply the credit memo to an invoice accordingly.

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