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Issue a credit against an invoice — apply it to a balance or refund it
A credit note (also called a credit memo) records that you have credited a customer — for an overcharge, a goodwill adjustment, a returned item, or a renegotiated price. Issue one from Credit Notes, optionally linked to the invoice it relates to. The credit can then be applied to reduce an open invoice balance, or refunded as cash.
- Apply to an invoice — the credit reduces the amount due on an open invoice. The customer pays less; no money moves. This is the most common path.
- Refund — if the customer already paid, you return cash. A refund moves money out and is always reviewed by a person (see Refunds).
Credit note vs refund
A credit note is the record of the credit; a refund is one way to settle it (returning money). Applying a credit to an open invoice settles it without a refund. Both are tracked, so a credit can be partly applied and partly refunded.
A credit note starts as a draft, becomes issued when finalized, moves to partially applied or applied as you draw it down against invoices, and can be voided if issued in error. You are notified when a credit note is issued against one of your invoices.