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What Is a Credit Note? Meaning and When to Use One

A credit note reduces or cancels an amount already invoiced. Learn when to issue one, what it contains and how it relates to the original invoice.

Glossary · 1 min read · Updated 2 October 2026

By the Invoicelywise editorial team

Definition

A document a seller issues to reduce or cancel part or all of an invoice already sent, for a return, a correction or a discount.

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On this page
  1. When it is used
  2. What it usually contains
  3. Credit note, refund and corrected invoice
  4. Using this site

A credit note is a document a seller issues to reduce or cancel an amount that was already invoiced. It records that the customer now owes less, or nothing, for the original invoice.

When it is used

  • Goods are returned or a service was not delivered in full.
  • The original invoice had a mistake in price, quantity or tax.
  • A discount or allowance is agreed after the invoice was sent.

What it usually contains

  • The words “Credit note” and its own unique number.
  • The date, your details and the customer’s details.
  • A reference to the original invoice number and date.
  • The reason for the credit, the lines credited and the amount.
  • Any tax credited, shown separately.

Credit note, refund and corrected invoice

A credit note reduces the amount owed. A refund is money paid back. A corrected invoice replaces the original. Which one applies depends on the situation and on your country’s rules, so confirm with your tax authority or accountant.

Using this site

This site does not create credit notes. If your country requires one, issue it through your accounting or e-invoicing system, keep it in its own number series, and reference the original invoice. For what else belongs on an invoice, see what to include on an invoice. Start a new invoice with the invoice generator.

General information, not legal or tax advice. Rules differ by country.

Frequently asked questions

Do I have to issue a credit note to correct an invoice?

In many countries, yes, especially for VAT or GST purposes, instead of editing or deleting the original invoice. Some allow a corrected or replacement invoice instead, and many set required contents or e-invoicing steps for the correction. Check your tax authority.

Does a credit note mean a refund?

Not always. It reduces what the customer owes. It can be applied to a future invoice or paid back as a refund, depending on what you agree.

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