How to Create a Credit Note in QuickBooks Online

A credit note issues a refund or credit to a customer for returned items, overpayments, pricing adjustments or other billing corrections. It reduces the customer’s balance and keeps both their account and your financial records accurate.

Step 1 – Open a New Credit Note

A Create (+) – Click the Create button at the top of the left navigation bar to open the transaction menu.

B Credit note – Select Credit note under the Customers column.

Figure – Opening a new credit note

Step 2 – Complete the Credit Note Details and Save

A Customer – Select the customer receiving the credit.

B Credit Note Date – Enter or confirm the date the credit is issued.

C Credit Note no. – Review the automatically generated number, or enter your own if required.

D Product/service – Select the product or service being credited — use the same item as the original sale so the income account is reversed correctly.

E Description – Explain clearly what is being credited. This description appears on the credit note the customer receives.

F Qty – The quantity of items or services being credited.

G Rate – The unit price of the credited item — normally the price on the original invoice.

H Amount – Review the calculated credit amount before saving.

I Save and send – Saves the credit note, updates the customer’s available credit, and emails it to them. Use the arrow beside the button for Save and close instead.

Figure – Completing the credit note