Credit Notes - How to Create and Manage Credit Notes

1. When to use credit notes

Credit notes are appropriate for:

• Refunds and corrections — Issuing a credit for an overcharge, duplicate charge, or invoice error.
• Returned goods — Crediting all or some of the items on an invoice when the customer returns them.
• Discounts after the fact — Applying a post-invoice discount or goodwill credit.
• Overpayments — Crediting an amount the customer overpaid so it can be applied to future invoices.

In Tracksales, credit notes are always created from an existing invoice. You choose the invoice (by reference or from the invoice’s details), and the credit note is linked to that invoice’s customer. You can then apply the credit to that invoice and/or other invoices for the same customer. See Creating and managing invoices for how to finalize invoices so they can receive payments and credits.

2. Creating a credit note from an invoice

You can start a credit note in two ways:

• From the Credit Notes list — Go to Credit Notes from the main menu, click Create Credit Note, then enter the invoice number (reference) for the invoice you want to credit. The system loads that invoice and opens the credit note form with the invoice’s line items and customer pre-filled.
• From an invoice’s details panel — Open the invoice from the Invoices list, then in the details panel click Add Credit Note. You are taken to the credit note create form with that invoice already selected and its lines pre-filled.

Credit notes cannot be created for draft invoices. Finalize the invoice first (use Mark as Finalized on the invoice). The Add Credit Note button on an invoice’s details panel is only shown for finalized invoices (Due or Paid).

On the create form you will see:

• Customer and Order # — Filled from the invoice and read-only when creating from an invoice.
• Credit Note Date — Editable.
• Line items — Pre-filled from the invoice. Each line shows product name, quantity, rate, discount, and tax (with tax rate per line, same as invoices and estimates). When creating from an invoice, you can only change the quantity on each line. Set quantity to 0 for any line you do not want to credit (e.g. to credit only one item out of five). You cannot add new lines or change product, rate, discount, or tax when creating from an invoice.
• Remaining creditable amount — A banner at the top shows the invoice’s remaining creditable amount. The credit note total must not exceed this amount.

Adjust quantities as needed, then click Create Credit Note. The credit note is saved and linked to the source invoice. Only the amount needed to bring that invoice’s balance to zero is applied automatically; if the invoice is fully paid or partially paid, the rest of the credit note remains available to apply to other invoices for the same customer.

3. Credit note balance and status

Each credit note has:

• Total — The full value of the credit note (sum of credited line items with tax).
• Balance (unused credit) — Total minus the total amount already applied to invoices. This is the amount you can still apply to other invoices.
• Status — Open when there is unused credit (balance > 0); Closed when the full amount has been applied (balance = 0).

The system recalculates balance and status whenever you apply the credit note to an invoice or remove an application, so you can always see how much is left to use.

4. Applying a credit note to invoices

You can apply an Open credit note to one or more invoices for the same customer:

1. Open the credit note from the Credit Notes list.
2. In the details panel, when the credit note has unused credit you will see Credit Available and an Apply Credits button. Click it to open the Apply Credits modal.
3. In the Apply Credits modal you will see the credit note’s available balance and a list of the customer’s invoices with their current Invoice Balance. Enter the Amount To Credit for each invoice you want to apply the credit to. You can apply only up to the invoice balance for each invoice, and the total amount you apply cannot exceed the credit note’s available balance.
4. Click Apply Credits. The amounts are applied: each invoice’s balance is reduced, and the credit note’s balance and status are updated. When all credit has been used, the panel shows Credit Note Utilized (all credits applied to invoices). If an invoice’s balance reaches zero, its status becomes Paid.

You can apply the same credit note to multiple invoices in one go or in separate steps. Any unused amount remains on the credit note for future use.

Applying credits from the invoice

You can also start from an invoice when you want to reduce that invoice’s balance using one or more of the customer’s open credit notes. The Apply Credits button appears only when the invoice has a balance due and the customer has at least one open credit note with available balance (so you won’t see it for every invoice).

1. Open the invoice from the Invoices list.
2. When the customer has open credit notes, Apply Credits appears on the overview (next to Record Payment) and on the Credit Notes tab. Click it to open the Apply Credits modal.
3. In the modal you will see each of the customer’s open credit notes with its Available balance. Enter the Amount to apply to this invoice for each credit note. You cannot apply more than the invoice balance or more than each credit note’s available balance.
4. Click Apply Credits. The amounts are applied: the invoice balance is reduced, and each credit note’s balance and status are updated. If the invoice’s balance reaches zero, its status becomes Paid.

This is useful when you want to clear one invoice in a single step using whatever open credits the customer has.

5. Viewing and applying credit notes on an invoice

On an invoice’s details panel, the Credit Notes tab lists all credit notes that have been applied to that invoice, with the amount applied and the date. When the invoice has a balance due, an Apply Credits button appears so you can apply more of the customer’s open credit notes to this invoice without leaving the tab. You can open any listed credit note from there. If you need to undo an application (e.g. you applied the wrong amount), you can remove that credit from the invoice; you will be asked to confirm. After removal, the invoice balance is recalculated and the credit note’s unused balance increases by the removed amount.

6. Viewing invoices credited on a credit note

On a credit note’s details panel, the Invoices Credited tab lists every invoice this credit note has been applied to, with the amount applied and the date. You can open an invoice from there. This helps you see exactly where the credit was used.

7. Editing a credit note

You can edit a credit note that was created without the “from invoice” flow (or after creation, when the form is in full edit mode). Open the credit note and click Edit Credit Note. You can change the customer (if allowed), Order #, date, line items (add, remove, or change quantity, rate, discount, and tax), and comments. Tax is loaded per line like on invoices and estimates. Save to update the credit note. If the credit note was created from an invoice and is still in “quantity only” mode, only the quantities on the pre-filled lines are editable.

8. Voiding a credit note

If you need to cancel a credit note entirely, open it and use Void Credit Note. You will be asked to confirm. Voiding:

• Removes all applications of this credit note to invoices (as if the credit was never applied).
• Recalculates each affected invoice’s balance so it goes back up by the amount that was credited.
• Marks the credit note as voided (soft delete) so it no longer appears as an active credit note.

Use this only when the credit note was issued in error and should be fully reversed.

9. Credit note reference numbers

Each credit note gets a unique reference number (e.g. CN-000789) when it is created. The number is generated automatically and is not reused, so you can rely on it for filing and reconciliation.

10. Managing the credit notes list

From the Credit Notes page you can search, filter by customer or status, and change the page size. Use the Columns button to choose which columns to show (e.g. date, reference, customer, total, balance, status). Your column choices are saved. Click any credit note row to open its details in the panel on the right.