How to create a credit note from scratch

This article explains how to create a credit note from scratch.

A credit note is essentially the notice of a refund. If you’ve previously issued a customer an invoice, a credit note signals to them that they no longer have to pay the full amount of that invoice. As well as creating a credit note from scratch, you can create a credit note from an invoice, which might be an easier option.

1. Navigate to 'Contacts', 'Projects' or 'Invoicing'

You can create a new credit note directly from the contacts or projects overview screens. Just select 'Add new' and choose 'Credit Note' from the drop-down.

Alternatively, you can create a new credit note from the 'Invoicing' section. Navigate to the 'Work' tab, choose 'Invoicing' and then select the 'Add New Credit Note' button at the top right of the page.

2. Enter the contact and project details

Contact

If you’re adding a credit note for a contact, choose a client from the 'Contact' drop-down menu. If it's a new client, you'll need to enter them as a contact first. You can also quickly add a new contact by selecting the 'Or, add a new contact' link next to the contact name drop-down. Bear in mind that if the contact is hidden, you won't be able to see them on this list.

Project

Once you select a contact, you have the option to attach it to a project. You can also leave it as the default 'No Project' option.

3. Fill in the credit note details

Credit Note Reference Number

You’ll notice that FreeAgent automatically gives each credit note a reference number. We use the same referencing system for all of your invoices and credit notes, to make sure that they all have unique references. If you wish, you can set FreeAgent to generate client-specific or project-specific credit note reference numbers. You can specify this using the 'Edit Details' button of the appropriate contact or project.

4. Add in any extra options

Select the arrow next to 'More Options' to display this area and choose any extra options that apply.

Credit note discount

If you need to apply a discount to the credit note, for example, if the initial invoice had a discount applied, you can enter that discount percentage here.

Client Contact Name

If you’re sending the credit note to someone other than the person listed as the contact for that client, enter the name of the person you want to address the credit note to (e.g. if the listed contact is the purchase ledger clerk and you want to send the credit note to the finance manager).

Bank Account

By default, the details of your primary bank account in FreeAgent will be displayed on your credit notes. However, if you would like to refund the customer from one of your other bank accounts in FreeAgent, you can choose to display the details of that account on the credit note instead. To do this, simply select the appropriate account from the 'Bank account' drop-down menu.

Select 'Save Changes' to create your new credit note. You'll then see the newly created credit note, at which point you’ll be able to add new items and send it to your client.

Making sure everything adds up

If no money is changing hands, for example if the work was cancelled or there was a mistake on the original invoice, you’ll need to show both the credit note and invoice as settled in FreeAgent.

If you are refunding a customer, make sure to explain the bank transaction as 'Type: Credit Note Refund' when it appears in your account.