What is a credit note? When to issue one

You sent an invoice, then something changed — you overcharged, the client returned part of the order, or a project was cancelled after billing. You don’t edit or delete the original invoice. You issue a credit note against it.

What a credit note is

A credit note (or credit memo) is a document that reduces or cancels the amount a client owes on an invoice you’ve already issued. It’s effectively a negative invoice: it references the original, states how much is being credited, and leaves a clean trail showing why the balance changed.

The original invoice stays exactly as it was. The credit note sits alongside it, so anyone reading the books later can see both the charge and the correction.

When to issue one

You overcharged — wrong quantity, wrong rate, or a duplicate invoice.
Returned goods or rejected work — the client is no longer paying for part of what was billed.
A cancelled or reduced project after the invoice went out.
A post-invoice discount you agreed to (goodwill, early-payment, a service issue).
Writing off a small balance you’ve decided not to chase.

Credit note vs. refund vs. debit note

These get mixed up constantly:

Credit note — reduces what the client owes. No money moves on its own; it offsets an outstanding or future invoice.
Refund — actual money paid back to the client (used when they’ve already paid).
Debit note — the opposite of a credit note: it increases the amount owed, usually raised by the client to flag an under-charge or by you to add a missed cost.

A common flow: client already paid the full invoice, you issue a credit note for the corrected amount, then refund the difference.

What a credit note should include

Your details and the client’s, same as an invoice;
A unique credit note number and the date;
A clear reference to the original invoice number — this is the part people forget;
The reason for the credit;
Itemised lines with the amount being credited (and tax, if you charge it);
The total credited.

Don’t just edit the original invoice

Quietly changing or deleting a sent invoice breaks your audit trail and makes reconciliation a nightmare — for you and the client. Issue a separate credit note instead. The credit note generator builds one that references the original invoice and exports to PDF or CSV; there’s also a downloadable credit note template if you’d rather work in Excel or Word. To raise the original charge in the first place, use the invoice generator.

Keep corrections off your overdue pile

Credits and adjustments make it harder to see what’s actually still owed across a client’s account. Duefy tracks each client’s real outstanding balance and chases only what’s genuinely overdue, so corrections don’t muddy your follow-up.