What is a credit note?
By Diljit Ramachandran, founder of The Invoice Generator. Published Oct 26, 2026.
A credit note, also called a credit memo in the US, is a document a seller issues to reduce or cancel an invoice already sent. It records that the buyer owes less, usually because of a return, a mistake or a discount agreed afterwards.
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When do you issue a credit note?
Issue one when you billed too much, goods came back, a service fell short, or you agreed a discount after invoicing. Once an invoice has been sent, do not edit it; issue a credit note instead. A draft you have not sent can still be changed.
What should a credit note include?
A credit note generator fills these in. It is not a request for payment:
- The words credit note, its own number and date (see numbering)
- The invoice it adjusts
- The items or amounts credited and the total credit
- Tax, if the original had tax
- How it will be settled
What is the difference between a credit note and a debit note?
A credit note is always seller to buyer.
| Credit note | Debit note | |
|---|---|---|
| Effect | Lowers what the buyer owes | Raises it, or the buyer's notice of a return or dispute |
| Example | Credit 120 on a 660 invoice; 540 is left | Add a charge you left off |
Does a credit note mean a refund?
Not by itself. The buyer can use the credit against future invoices, or you can pay it back. Say which on the credit note.
What if you receive a credit note?
Keep it, match it to the invoice, and deduct it from what you pay or ask for the refund.
Questions
- Is a credit note an invoice?
- It is not a request for payment. It is a separate document with its own number, linked to the original invoice.
- Is a credit memo the same as a credit note?
- Yes. Credit memo is the common US name. See what to put on an invoice for the original.
Keep every document in one place
- A free account saves a copy of each invoice, remembers your clients and items, and shows what is paid and overdue.
- Pro numbers your invoices for you, emails payment reminders, and repeats the ones you send every month.
Drafted with AI assistance from public sources and our own tool, and published by Diljit Ramachandran. It has not been checked by an accountant. It is general information, not tax or legal advice. Rules differ by place; check with an accountant or your local tax office.