A credit note formally reverses or adjusts taxable revenue recognised on a prior customer invoice: it reduces receivables and keeps VAT adjustments traceable alongside the originating Fatoora-linked payload when your organisation is configured for compliance.
Common drivers include partial returns, pricing corrections, or allowances after finance approval. Credits can remain on account for application to future invoices or become cash refunds through treasury. The checklist mirrors the Welcome guide flow.
Create a credit note
Steps follow the Welcome guide; the screenshot shows the new credit note form.
- Open Sales, then choose Credit Note to create a new credit note.
- Select the customer the credit note is for.
- Add an attachment when you need supporting documents on file.
- Upload your organisation logo so the PDF reflects your brand.
- Select the originating invoice the credit note adjusts.
- Enter the commercial or statutory reason you are issuing the credit note.
- Choose the transaction type from the options available to your organisation—such as Normal Supply or Export.
- Choose whether VAT is treated as inclusive or exclusive on the document.
- Add line items from the items section using catalog items or narration as your setup allows.
- Choose the revenue or account classification each line should hit when your chart requires it.
- Enter quantities for credited lines.
- Set unit prices reflecting the amounts being reversed or adjusted.
- Pick the applicable tax treatment per line—VAT on sales, zero-rated, exempt, or out of scope—matching the original supply where required.
- Apply line-level discounts with a percentage or a fixed amount when adjustments include commercial rebates.
- Add header, footer, or operational notes that should print or stay visible internally.
- Add a digital signature or stamp when approvals demand it.
- Save the credit note to post or retain as draft according to your issuing workflow.
After you save
- Net outstanding AR through Apply Credits to Invoice when you want settlements without a new receipt line.
- Route bank refunds from Refund Credits once treasury authorises outbound cash tied to the credit.
Quick tips
- Always link the credit note to the originating invoice for VAT traceability.
- Record the reason for issue in the dedicated field—it helps auditors and ZATCA.
- Match line tax treatment to the original invoice where possible.