Credit note: what it is and how to make one
24 July 2026 · 5 min read
A credit note is an invoice that cancels or corrects an earlier invoice in full or in part. It is used when the original invoice had an error, the customer returned a product, or you agreed on a credit. A credit note always refers to the original invoice. Here is how to make one.
What a credit note is
Once an invoice has been sent, you don't correct it by erasing it or by making a new sales invoice to replace the old one. Instead you make a credit note that cancels the original invoice in full or in part. That way the invoicing history stays intact and the bookkeeping adds up: both the original invoice and its credit are visible.
When a credit note is made
- The original invoice had an error, for example the wrong amount or quantity
- The customer returned a product or part of the order
- You agreed on a discount or a credit afterwards
- The invoice went to the wrong customer by mistake
What a credit note must contain
A credit note has the same mandatory details as an ordinary invoice, plus a clear reference to the original invoice it concerns. The amounts are marked as a credit, that is they reduce the original charge. If the original invoice included value added tax, the credit is also made with tax at the same rate, so that the VAT is corrected properly.
- A reference to the original invoice and its number
- The lines and amount being credited
- Value added tax at the same rate as in the original
- The credit note's own number and date
A partial or a full credit
A credit note cancels the original invoice in full. The original stays visible and the credit is recorded alongside it, so the outcome can be traced. If only part of the sale falls through, agree the final amount with the customer and issue a credit note plus a new invoice for the correct amount.
How to make a credit note in Haimoo
In Haimoo Invoice you make a credit note based on the original invoice, so the reference and details carry over and you don't have to rewrite them. You mark the lines to be credited, and the program corrects the amounts and the value added tax.
Credit notes don't use up the free-tier limit
On the free Starter tier you make three invoices a month. Credit notes don't use up this limit: the three-invoice limit applies to new sales invoices, so you can make a needed credit note even after the month's sales invoices are used up. That way correcting an error is not stuck behind the limit.
A credit note is a clean and compliant way to correct an error or cancel a charge. You can start invoicing and making credit notes in Haimoo Invoice for free, and the paid tier opens unlimited invoicing and reports.