Credit Notes (Returns)

Handle product returns and issue credits to customers.

Interface Overview

Business Overview

A Credit Note is issued when a customer returns goods or when you agree to reduce their balance after a sale (Receipt or Invoice) has been posted. This is the professional way to reverse sales.

Actions

Creating a Credit Note

1. Go to Sales > Credit Notes.
2. Click Add Credit Note.
3. Source Sale (Optional): To link the return directly to a specific transaction, click the search icon in the "Source Sale" field. This opens the Select Sale to Return modal where you can:
   • Search by Receipt #, Invoice #, or Customer Name.
   • Filter by Branch and Date (e.g., "This Month", "Today").
   • Click Select on the correct transaction. This will automatically populate the return form with the exact items and quantities from that sale, preventing the cashier from returning more than was originally purchased.
4. Items: Add or adjust the returned items (if you didn't use a Source Sale, you will need to add them manually).
5. Restock Checkbox: ⚠️ CRITICAL FOR INVENTORY
   • CHECKED (Default): Items are added back to inventory stock. Inventory account is debited (increases inventory value). COGS account is credited (reverses cost of goods sold). Use this for normal returns where items will be resold.
   • UNCHECKED: Items are NOT added back to inventory. No inventory accounting entries created. Only Sales Returns and Accounts Receivable accounts affected. Use this for damaged returns, write-offs, or when items shouldn't be restocked.
6. Refunding: Toggle "Record as Cash Refund" if you are paying the customer back instantly.
7. Click Save & Post.
8. Effect: Reduces the Customer's balance and (if Restock is checked) increases your Inventory.

Viewing & Printing

• Review all returns in the Credit Notes List.
• Send a PDF copy to the customer as confirmation of their credit.

Recording Refunds Post-Creation

If a user creates a credit note without a refund (either due to a lack of permission or simply choosing not to process the refund immediately), the refund can be processed later using the standard Banking modules:

For Credit Notes (refunding a customer): Go to Banking > Withdrawals and create a new manual withdrawal for the refund amount. You would tie the withdrawal directly to the respective Customer.

You can issue or process a refund for a saved credit note at any time after it is created, provided it is in a Posted status and has an outstanding refundable balance.

Users who have the appropriate refund permission can access the Record Refund feature in two places:

• From the List Page (index.php): Click on the action menu (the row clicking or three-dots menu depending on the table UI) next to the specific Credit Note. In the dropdown menu, click on Record Refund.
• From the Detailed View Page (view.php): Open the specific Credit Note to view its full details. In the top right corner of the document header, click the More dropdown button, and select Record Refund.

(Note: The Record Refund option will dynamically hide itself or show a lock icon if the user does not have the specific refund permission, or if the note has already been fully refunded.)

Editing & Voiding

Editing Credit Notes

• Draft Status: You can edit all fields including items, quantities, and the Restock checkbox when the credit note is in draft status.
• Posted Status: Once posted, credit notes become locked to maintain accounting integrity. You cannot edit a posted credit note directly.

Correcting Restock on Posted Credit Notes

If you need to change the Restock setting on a posted credit note:

1. Void the posted credit note - This reverses all accounting transactions and stock movements
2. Create a new credit note with the same details
3. Adjust the Restock checkbox as needed for each item line
4. Post the new credit note

This ensures a clean audit trail and maintains the integrity of your financial records.

[!NOTE] Draft Status: If the credit note is still in Draft status, you can simply click the Edit button to directly modify the Restock checkbox without voiding and recreating. The void/recreate process is only required for posted credit notes.

Voiding & Canceling Credit Notes (Reversing Store Credit)

If a Credit Note was created by mistake or with incorrect items/quantities, you can cleanly reverse it and remove the associated store credit.

How to Cancel a Mistakenly Created Store Credit

Store credits in QoBooks are generated primarily through Credit Notes (or cashier change saved as credit during checkout). Follow the appropriate scenario below to cancel or reverse the credit:

Scenario A: The Credit Note is POSTED (Finalized)

Once a credit note is posted, it cannot be directly deleted to preserve double-entry accounting integrity. Instead, you must Void it:

1. Navigate to Sales > Credit Notes in the sidebar.
2. Locate the credit note in the list (search by Customer name, CN number, or original Receipt/Invoice number).
3. Access the action menu:
   • Click the three vertical dots (⋮) on the right of the row and click Void (red icon).
   • OR click the CN Number to open the view modal, click the More button at top right, and choose Void.
4. In the dialog box, enter an audit reason (e.g., "Mistakenly created store credit" or "Incorrect return items") and confirm by clicking "Yes, void it!".

What the System Automatically Reverses:

• Customer Balance & Store Credit: The customer's store credit is immediately removed, restoring their balance to what it was prior to the return (balance + credit amount).
• Inventory Restock Reversal: If the return originally restocked items back into inventory, the system automatically executes a stock reversal (sales_return_void) to deduct those items back out of stock, ensuring physical inventory counts remain accurate.
• Accounting Journal Reversal: The General Ledger journal entry is voided, reversing entries posted to the Customer Credits liability account, Sales Returns, and Inventory / COGS accounts.
• Lifecycle Status: The credit note status updates to VOID (displayed with a strikethrough in the table) for audit tracking.

Scenario B: The Credit Note is in DRAFT Status

If the credit note was saved as a draft and has not yet been posted:

1. Go to Sales > Credit Notes.
2. Click the three dots (⋮) next to the draft note or open the note.
3. Click Delete and confirm.
4. The draft note and its line items are permanently removed without affecting the customer balance or ledger.

Scenario C: Store Credit Created at POS / Checkout ("Save change as store credit")

If a customer was given store credit from cash change during a POS or Sales Receipt checkout:

1. Go to Sales > Receipts (/sales/receipts/).
2. Locate the receipt where the change was saved as credit, click More / Actions (⋮), and select Edit.
3. Uncheck "Save change as store credit?" (or adjust the cash amount received to the exact bill total), then click Save.
4. Alternatively, click Void on the receipt if the entire transaction was invalid.

Important Pre-conditions & Caveats

1. Active Cash Refunds: If a manual refund was already recorded against the Credit Note (via Record Refund), the system will prevent voiding the parent note until you first void the refund transaction under Banking > Withdrawals or the transaction audit tab.
2. Store Credit Already Consumed on a Subsequent Invoice: If the customer has already applied their store credit to pay for another invoice, voiding the credit note will restore their balance, but you should review their statement under Sales > Customers > Statement to verify their outstanding balance.
3. Required Permissions: The user role must have permission for Credit Notes > Void (or Credit Notes > Delete for drafts). If the Void option is hidden or disabled, an administrator or owner can perform the action.

[!IMPORTANT] Accounting Integrity: Never delete an invoice or receipt after an exchange or return has occurred. Always issue and, if necessary, void a Credit Note so that your tax authorities and auditors have an unbroken chronological trail.