Credit note generator

You invoiced 50,000 and the correct figure was 45,000. The temptation is to open the invoice, change the number and send it again. Do not. An invoice that has left your hands is a record, and the way to correct a record is to issue another one that explains the change.

What a credit note does

A credit note reduces an amount previously invoiced. It is a negative document that sits alongside the original rather than replacing it, so the trail reads: this was charged, then this much was credited, therefore this is owed. Anyone reviewing the account a year later can follow it without asking you.

• A returned item or a cancelled part of an order
• An overcharge: wrong quantity, wrong rate, a discount you forgot to apply
• A goodwill reduction after a complaint
• A duplicate invoice, credited in full

What it must carry

A credit note that does not name the invoice it corrects is almost useless, and in VAT jurisdictions it is not acceptable. Both the UAE and Saudi presets in this tool require the original invoice number on a credit note for exactly that reason.

• The words Credit note, never Invoice
• Its own number, from your credit note sequence
• The date of issue
• The original invoice number and its date
• Your details and the client's, including tax registration numbers where the original carried them
• The lines being credited, with quantity and rate
• The tax being credited, at the rate used on the original
• The total credited
• The reason, in one sentence

The UAE Executive Regulation sets out what a tax credit note must contain, including a reference to the original tax invoice. Cabinet Decision No. 52 of 2017, Executive Regulation

The tax you already declared

If the original invoice charged tax, the credit note reverses that tax at the same rate. Credit 5,000 of a 15 per cent supply and you credit 750 of VAT with it, and your return for the period reflects both. Using today's rate on a correction to last year's invoice is a common and avoidable error: the rate follows the original supply, not the calendar.

A worked example

Refund or offset

A credit note does not decide where the money goes. Say in the notes whether the amount is refunded or held against the next invoice, because the client's finance team will otherwise assume the one that suits them, and that is how a credit gets claimed twice.

Choose Credit note as the document type and the reference field for the original invoice appears with it. Invoicora keeps credit notes on their own numbering sequence.