Customer Credit Notes and Refunds

A credit note is considered a negative invoice. In the same way that payments are applied to close out an invoice balance, refunds are issued to close out a credit note balance.


Returns and refunds issued through DEAR POS and most sales channels (except for Amazon and Magento) will automatically generate credit notes in DEAR. Returns or refunds of sales, processed through DEAR B2B Sales Channel, Amazon and Magento, will need a credit note to be issued in DEAR as described in this article.



Credit notes are a way to amend the details of a sale invoice after it has been authorised.


There are four scenarios where a credit note can be applied to a sale order in DEAR. These are:

  • For individual items – when a unit price has been overcharged.
  • For part of a shipment – when part of a shipment has either been short-shipped, damaged goods were received by the customer, or customer returns items from a sale. 
  • For a whole shipment – when an entire shipment was received incorrectly by the customer, was shipped out incorrectly, or was returned by the customer.
  • For a discount applied to an order after the invoice has been authorised. See Product Discounts and Product Deals for discounts applied before the Sale is invoiced. 


Each scenario will generate different transactions and affect your stock availability levels differently. Follow the instructions below to make sure you issue the credit note that matches your situation. You can combine these methods in the same credit note if required. 


Finally, credit notes can be issued to customers that are not associated with any particular sale. 


If you need to process multiple credit notes for the same sale order, you will need to convert the purchase order to an Advanced Sale

To add a credit note as part payment of an invoice, see Applying credit notes as part payment - Sale


NOTE: Credit notes can only be issued to sale orders with the Completed status. Credit notes can be voided at any point by clicking Void Credit Note. Voiding a Credit Note does not void the associated sale order. 


NOTE: It is not currently possible to display credit order notes on documents for the customer, when the credit note is applied to a sale order. We recommend using the sale order memo field to make notes that need to be shown on customer documents. For standalone credit notes/sale credit notes, Credit Memo field text can be added to Sale Return document template. See Managing document templates for more information.


NOTE: Items in the credit note with a Bill of Materials showing their component parts will be auto-disassembled during restock. For more information, see Disassembly


Prerequisites:


Table of Contents


Unit price overcharge

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A supplier can issue a credit in the case of the unit price of an item being overcharged. This type of credit note will have no effect on your stock levels. 


Issue a credit note for unit price overcharge:

  1. Navigate to Sale -> Sales and select the sale order you wish to apply the credit note to.
  2. Select the Credit Note tab of the purchase order.
  3. Enter the credit note date. The credit note number will be assigned automatically when the credit note is authorised. 
  4. Add the overcharged items to the credit note by clicking + or +Add more items. 
  5. In the Price field, enter the difference between the correct price and the overcharged price, and the quantity of overcharged units. 
  6. Click Authorise to process the credit note.
  7. You will be prompted to carry out a Restock action. Set the quantity to 0 and Authorise



Credit note for partial shipment

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When part of the shipment has either been short-shipped, sent incorrectly, or returned by the customer, a credit note should be issued for the incorrectly received/returned items. Authorising this credit note will trigger a Restock action, returning the items from your stock levels. The Restock quantity can be changed, for example, if a refund has been issued to the customer, but the items have been written off due to damage. 


To add a credit note for a part of a shipment:

  1. Navigate to Sale -> Sales and select the sale order you wish to apply the credit note to.
  2. Select the Credit Note tab of the sale order.
  3. Enter the credit note date. The credit note number will be assigned automatically when the credit note is authorised.
  4. Add the incorrectly received or returned items to the credit note by clicking + or +Add more items. You can also click Copy to add all of the order lines from the shipment, then delete the correctly received lines.
  5. In the Quantity field of the item line, enter the number of items that were incorrectly received or returned.
  6. Click Authorise.
  7. You will be automatically prompted to Restock the credit note items. Check that the Quantity field indicates the actual number of items restocked.
  8. Click Authorise to complete.



The restocked items will then be returned to your inventory, and your accounts will be updated. If damaged items have been restocked by mistake, you can then write them off from the inventory tab.


Credit note for full shipment

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When an entire shipment has either missing, damaged stock items or stock items returned from the customer, a credit note should be issued for the incorrectly received/returned items. Authorising this credit note will trigger a Restock action, returning the items to your inventory. The Restock quantity can be changed, for example, if a refund has been issued to the customer, but the items have been written off due to damage.


To add a credit note for a whole shipment:

  1. Navigate to Sale -> Sales and select the sale order you wish to apply the credit note to.
  2. Select the Credit Note tab of the sale order.
  3. Enter the credit note date. The credit note number will be assigned automatically when the credit note is authorised.
  4. Copy the invoice items across to the credit note tab.
  5. Click Authorise.
  6. You will be automatically prompted to Restock the credit note items. Check that the Quantity field indicates the actual number of items restocked.
  7. Click Authorise.


The restocked items will then be returned to your inventory, and your accounts will be updated. If damaged items have been restocked by mistake, you can then write them off from the inventory tab.


Discount applied to order

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You may wish to apply a discount to a sale order after the invoice has been authorised. This can be done by using a credit note. 


To add a discount to the whole order:

  1. Navigate to Sale -> Sales and select the sale order you wish to apply the credit note to.
  2. Select the Credit Note tab of the sale order.
  3. Enter the credit note date. The credit note number will be assigned automatically when the credit note is authorised.
  4. Make a note of the total cost of the shipment.
  5. In the additional charges section, add an item line.

  6. Fill in the Description field with the discount value. You can create a generic non-inventory item for discounts, or just type in the description field and hit enter.
  7. Insert the discount value into the Price field.
  8. Check that the correct Account and Tax Rule are applied.
  9. Click Authorise.


Your accounts will be updated, and your inventory levels will stay unchanged. 


Standalone credit note (Credit note sale)

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If a credit note needs to be issued to a customer without being linked to a particular order (such as when goods are not being returned but the customer still needs to be refunded), a standalone credit note can be created. You will need to create a Refund Service item (if you do not have one already) in order to create standalone credit notes.


To create a Refund service item:

  1. Navigate to Inventory -> New -> Product/Service.
  2. Create a Service or non-inventory item called Refund and Save your changes.


To create a standalone credit note:

  1. Navigate to Sale -> New -> Sale Credit Note.
  2. Select a Customer from the list.
  3. Most of the information will be filled automatically. Check the details and amend any, if necessary.
  4. Enter the Credit Note Date and Customer Reference (if applicable).
  5. Assign a Sales Representative.
  6. Click or Add more items to add items. Since the credit note is not associated with a sales order, the list of products will not come up but you can select your Refund item from the list of services. 
  7. Enter the value of the Refund into the Price field.
  8. Click Authorise.


Refunds

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Refunds are applied to credit notes in the same way that payments are applied to invoices. Credit notes must be authorised before refunds can be applied. 


NOTE: If using Xero as your accounting system, ensure Xero payment settings are set to Synced both ways or Pushed to Xero. QuickBooks Online payments are set by default to sync both ways. Some users prefer to entirely manage their payments/refunds through their accounting system. If this is the case, you can leave this section blank, the refund details will be imported from your accounting system and applied to the order.


Credit notes can be issued as a refund or as a customer credit to be used against future sales. 


To issue a credit note refund to a customer credit:

  1. Return some or all of the value of the credit note to a customer credit by clicking +Return to Customer Credit.
  2. A pop-up window will open, fill in the fields and click Create to continue.
  3. The supplier deposit value will be added to the Refund section.



To issue a credit note refund as payment:

  1. Return some or all of the value of the credit note to the customer by clicking + Refund.
  2. Enter the details of the account to make the payment from and the date paid, then click Save to finish.



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