documentation/content/applications/finance/accounting/customer_invoices/credit_notes.rst

========================
Credit notes and refunds
========================

A **credit/debit note**, or **credit/debit memo**, is a document issued to a customer that notifies
them that they have been *credited/debited* a certain amount.

Several use cases can lead to a credit note, such as:

 - a mistake in the invoice
 - a return of the goods, or a rejection of the services
 - the goods delivered are damaged

Debit notes are less common but are most frequently used to track debts owed by customers or to
vendors because of modifications to confirmed customer invoices or vendor bills.

.. note::
   Issuing a credit/debit note is the only legal way to cancel, refund, or modify a validated
   invoice. Do not forget to **register the payment** afterward if you need to send money back to
   your customer and/or validate the
   :doc:`return </applications/sales/sales/products_prices/returns>` if a storable product is
   returned.

.. _accounting/issue-credit-note:

Issue a credit note
===================

You can create a credit note from scratch by going to :menuselection:`Accounting --> Customers -->
Credit Notes`, and by clicking on :guilabel:`Create`. Filling out a credit note form works the same
way as an invoice form.

However, most of the time, credit notes are generated directly from the related invoices. To do so,
go to :menuselection:`Accounting --> Customers --> Invoices`, open the related **customer invoice**,
and click on :guilabel:`Credit Note`.

You can choose between three options:

   - :guilabel:`Partial Refund`
   - :guilabel:`Full Refund`
   - :guilabel:`Full refund and new draft invoice`

.. note::
   A credit note sequence starts with `R` and is followed by the number of the related document
   (e.g., RINV/2019/0004 is related to the invoice INV/2019/0004).

Partial refund
--------------

When selecting the :guilabel:`Partial Refund` option, Odoo creates a draft credit note already
prefilled with all the necessary information from the original invoice. This is the option to choose
if you wish to do a partial refund or if you want to modify any detail of the credit note.

.. note::
   This is the only option for invoices marked as *in payment* or *paid*.

Full refund
-----------

When selecting the :guilabel:`Full Refund` option, Odoo creates a credit note, automatically
validates it, and reconciles it with the related invoice.

.. image:: credit_notes/credit_notes02.png
   :alt: Full refund credit note.

This is the option to choose for a full refund or to **cancel** a *validated* invoice.

Full refund and new draft invoice
---------------------------------

When selecting the :guilabel:`Full refund and new draft invoice` option, Odoo creates a credit note,
automatically validates it, reconciles it with the related invoice, and opens a new draft invoice
prefilled with the same details from the original invoice.

This is the option to **modify** the content of a *validated* invoice.

.. _accounting/issue-debit-note:

Issue a debit note
==================

You can create a debit note from scratch by going to :menuselection:`Accounting --> Customers -->
Invoices` or by clicking on the related invoice you wish to issue a debit note for. On the invoice
form view, click :guilabel:`Cog icon (⚙) --> Debit Note`, fill in the information, and click
:guilabel:`Create Debit Note`.

Record a vendor refund
======================

**Vendor refunds** are recorded the same way as credit notes:

You can either create a credit note from scratch by going to :menuselection:`Accounting --> Vendors
--> Refund`, and by clicking on :guilabel:`Create`; or by opening the related **vendor bill**, and
clicking on :guilabel:`Credit Note`.

Record a debit note
===================

**Debit notes** from vendors are recorded in a similar way to how they are issued to customers:

Go to :menuselection:`Accounting --> Vendors --> Bills`, open the related bill you wish to record a
debit note for, and click :guilabel:`Cog icon (⚙) --> Debit Note`. Fill in the information, and click
:guilabel:`Create Debit Note`.

Journal entries
===============

Issuing a credit/debit note from an invoice/bill creates a **reverse entry** that zeroes out the
journal items generated by the original invoice.


.. example::
   The journal invoice of an entry:

   .. image:: credit_notes/credit_notes03.png
      :alt: Invoice journal entry.

   And here is the credit note’s journal entry generated to reverse
   the original invoice above:

   .. image:: credit_notes/credit_notes04.png
      :alt: Credit note journal entry reverses the invoice journal entry.