Sales Credit Notes

The Credit Notes module handles negative customer balances resulting from sales returns, pricing adjustments, or commercial goodwill credits.

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Business Logic & Allocation Mechanics

1. General Ledger Postings

Posting a Sales Credit Note immediately creates a balanced double-entry transaction in the General Ledger:

Debit:  Sales Revenue / Sales Returns Account   (Reduces reported revenue)
Debit:  Output Tax Liability (Tax Payable)      (Reverses previously recognized tax)
Credit: Accounts Receivable Control Account     (Reduces customer outstanding balance)

2. Credit Allocation Equation & Subledger Balance

Credit notes can either be linked to a specific originating invoice or created standalone:

Invoice Outstanding Balance = Invoice Gross Total - Allocated Payments - Allocated Credit Notes
Credit Note Unallocated Amount = Credit Note Gross Total - Sum(Allocated Amounts to Invoices)

• Allocation Impact: Allocating a credit note to an open invoice is an operational subledger matching action. Because Accounts Receivable was already credited at the moment of credit note posting, no second GL entry is generated upon allocation; the allocation simply links the subledger records and decrements both outstanding balances.
• Customer Balance & Aged AR: Credit notes immediately reduce the customer’s total open balance. In aged receivable reports, unallocated credit notes are applied against the oldest aging buckets (or displayed in the unallocated credit column).

3. Payout via Cash Refund

If a customer requests a cash payout rather than carrying forward account credit:

1. An operator creates a Payment Entry of type customer_refund.
2. The refund entry matches against the unallocated credit note, posting:

   Debit:  Accounts Receivable Control Account
   Credit: Bank Account

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Step-by-Step Workflows

1. Creating a Credit Note

1. Go to Sales → Credit Notes (/sales-credit-notes).
2. Click New Credit Note.
3. Select the Customer and (optional) linked Sales Invoice.
4. Add line items, credited amounts, and tax classifications.
5. Click Post Credit Note to post to Accounts Receivable and the General Ledger.

2. Allocating Credit to an Open Invoice

1. Open the posted credit note (/sales-credit-notes/:id).
2. In the Allocations panel, click Allocate to Invoice.
3. Select the target unpaid invoice and enter the allocation amount.
4. Click Confirm Allocation. Both the credit note and invoice outstanding balances update immediately.

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Field Reference

Field	Description
Credit Note Number	Legal credit note document reference (e.g. CRN-2026-00054).
Customer	Credited customer account.
Associated Invoice	Linked sales invoice if raised for a specific bill correction.
Total Amount	Total gross credit value including tax.
Outstanding Amount	Unallocated credit balance remaining on the account.