Credit notes

A credit note is a document that credits a customer. It reduces what they owe, or records a credit in their favor, without any cash changing hands. Use it to correct a bill, record a goodwill gesture, or note a credit you have agreed to.

A credit note is not a refund. A refund returns cash; a credit note credits the account. The two are separate, and you reach for a credit note when you want to lower a balance rather than send money back.

The lifecycle

A credit note moves through three states:

State	What it means
Draft	Being put together. Still editable.
Issued	Finalized. The amounts are frozen and cannot be edited.
Voided	Cancelled. It stays on the list for the record, but no longer counts toward the customer's balance.

Once a credit note is issued, its amounts are fixed. A change after that is made by voiding it and creating a new one, the same immutability that applies to invoices.

Three kinds

Every credit note is tagged with the kind of credit it is. This records your intent, and it keeps the accounting clear, so finance can tell goodwill given away from legitimate corrections.

Kind	Meaning
Adjustment	The common case: you agreed to a service credit or a correction. No cash refund expected.
Refundable	A credit you intend could be paid out as cash later.
Promotional	Goodwill, not refundable. Tracked on its own so it is clear what you gave away.

The kind is recorded for the audit trail and for reporting, and it also decides how the credit is used. Adjustment and promotional credit is drawn down automatically against the customer's future invoices. Refundable credit is held aside, because it is meant to be paid out as cash rather than spent on invoices.

How the credit is used

An issued credit note does not send money. It puts credit on the customer's account, and that credit comes off their next bill on its own.

When the customer's next invoice opens, any available adjustment or promotional credit in the same currency is applied to it automatically. The amount due goes down by the credit used, and the invoice shows an applied-credit line so it is clear where the reduction came from.

If the credit is larger than the invoice, only what is needed is used and the rest stays on the account for the invoice after that. If the credit is smaller, it covers part of the invoice and the customer pays the remainder.

Reasons

A credit note also carries a reason: duplicate, fraudulent, order change, product unsatisfactory, write off, subscription change, goodwill, or other. The reason sits alongside the kind, so a credit note says both what it is and why.

Numbering

Credit notes have their own number series, starting with the CN- prefix by default, separate from invoice numbers. See invoice numbering for how the numbering works.

In the API

Create a credit note with POST /v1/credit-notes, then POST /v1/credit-notes/{id}/issue to finalize it or /void to cancel it. You can also list and fetch them. See the API reference.

Edge cases

• A credit note is not a refund. It credits the account. To return cash, use a refund.
• Issued is not editable. Void and recreate to change an issued credit note.
• Voiding keeps the record. A voided credit note stays visible for the audit trail but stops counting toward the balance.