Creating a Credit Note from a Sales Invoice

Once an invoice is posted, you can use it to convert it to a credit note. The sales credit note created by the conversion inherits many of the original invoice details, including:

• Currency and tax details
• Analysis dimensions Custom objects that allow you to analyze the activity in your business in additional ways, such as by cost center, project, employee, or any other business entity important to you.
• Any values in custom fields used for sub-analysis mapping Mapping of custom fields at header and line level for the purpose of profitability reporting..
• Reference to the opportunity if the invoice was created from an opportunity

Note:
[Lightning Experience Only] When you have more than one current company selected, you can create a sales credit note for any of the currently selected companies. You do not need to change the current company. Administrators can create sales credit notes for any of their user companies, regardless of their current company selection.

Lightning Page

To create a credit note from an existing sales invoice:

1. Locate and retrieve the details of the sales invoice that you want to convert. See Viewing Sales Invoice Lists for more information.
2. Click Convert to Credit Note. If you can't see this button, contact your administrator.

   This creates a new credit note using the details of the selected sales invoice.

3. Click Edit to amend the sales credit note details, as required.
4. Add, amend or remove credit note line items, as required.
5. Click Save to create an "In Progress" credit note.

If the invoice has an income schedule Used to spread the income (revenue) from a sales invoice across a range of accounting periods. attached, this will not be canceled by the conversion to a credit note. For more information on what to do in this situation, see Crediting a Sales Invoice with a Schedule.

Classic Edition

To create a credit note from an existing sales invoice:

1. Locate and retrieve the details of the sales invoice that you want to convert. See Viewing Sales Invoice Lists for more information.
2. Click Convert to Credit Note. If you can't see this button, contact your administrator.

   This creates the template for a new credit note using the details of the selected sales invoice.

3. Amend the sales credit note details, as required.
4. Specify a reason for issuing the sales credit note.
5. Add, amend or remove credit note line items, as required.
6. Click Save to create an "In Progress" credit note.

If the invoice has an income schedule Used to spread the income (revenue) from a sales invoice across a range of accounting periods. attached, this will not be canceled by the conversion to a credit note. For more information on what to do in this situation, see Crediting a Sales Invoice with a Schedule.

Note:

The Convert to Credit Note button is not available if the sales invoice was created in FinancialForce Accounting v9 (or earlier) and the account's Account Trading Currency specified at V10 (or later) is different from the account's Account Currency.

Converting an Intercompany Sales Invoice to a Credit Note

If the sales invoice is associated with an intercompany account A special account used in intercompany transactions. To create an intercompany account, link it to the company details of the destination company., then when the sales credit note is posted, an intercompany transfer Object used as a staging location for data used when transferring costs to other companies in the same organization. record is created. The account line on the transaction will use the accounts receivable GLA from the related intercompany definition Defines the intercompany control accounts to use when transferring costs between companies in the same organization. not the accounts receivable control GLA from the account.

When you process this intercompany transfer, a payable credit note is created in the destination company Company that receives the costs during an intercompany transaction..

When you post this payable credit note, the account line on the transaction will use the accounts payable GLA from the related intercompany definition Defines the intercompany control accounts to use when transferring costs between companies in the same organization. not the accounts payable GLA from the account.

Note:

The same process is followed when you credit a sales invoice manually. That is when you create a credit note manually using an intercompany account.

Automatically Matching a Credit Note to Its Associated Sales Invoice

When you create a credit note by clicking the Convert to Credit Note button, you can automatically post and match the credit note to its associated sales invoice using the Post & Match button. If you are using the Sales Credit Note's Lightning page then you will find the Post & Match button in that page. This button is only available if the Invoice Number field is populated on the credit note, and the invoice is unmatched.

You can also match a sales credit note in “Complete” status to its associated sales invoice using the Match button. This button is only available on the Sales Credit Notes Lightning page.

Notes:

• The Match button is displayed only for those sales credit notes that are in “Complete” status. For more information see, Matching Sales Credit Notes to Sales Invoices.
• Before clicking the Match button or the Post & Match button, you must set the document's company as your current company.

When you click the Post & Match button:

• If the sales invoice and credit note fully match each other, the invoice's Match Type will be set to "Credited" to indicate that it has been fully matched to a credit note.
• If the credit note value is less than the sales invoice value, the invoice will be part matched. You must match the documents manually if you want to apply a discount or write-off.
• If the credit note value is greater than the sales invoice value, an error message will be displayed and you will remain on the sales credit note detail page so that you can amend the credit note value. If the credit note value is intentionally greater than the invoice value, you must match the documents manually.

When the sales invoice and credit note match successfully, a matching reference is created and the Matched Payments list on each document is updated in the usual way. Any currency differences are handled automatically by the creation of currency write-off journals. Documents matched using the Post & Match button can be unmatched in the usual way.

Note:

If the credit note fails to post, you will remain on the sales credit note detail page so that you can correct the credit note details. If the credit note posts successfully but fails to match the invoice, then you must resolve the match manually.

When the credit note qualifies for background posting

If the credit note qualifies for background posting (because it has more than 80 lines or its tax value is calculated by AvaTax), when you click the Post & Match button its status will change to "Ready to Post & Match" and it will be picked up for posting next time the background posting scheduler runs. Once the credit note has posted successfully, it will be matched to its associated sales invoice. You will be notified of the success or failure of the action.

If the match fails for any reason, the status of the credit note is rolled back to "In Progress" so that you can discard it if required.

For more information about the sales credit note thresholds, see Accounting Settings.

Converting a Sales Invoice That Contains Withholding Tax Information to a Sales Credit Note

A sales credit note converted from a sales invoice will inherit the Withholding Tax information.