Glossary
What is a credit note? Meaning, VAT and when to issue one
A credit note is a document a seller issues to reduce or cancel an invoice it has already issued, for example after a return, a pricing error or a discount granted later. It references the original invoice and states the amount and, in the EU, the VAT being corrected. A credit note records the adjustment; the money itself goes back through a refund or is offset against future invoices.
- Credit note
- A document issued by a seller that amends an initial invoice to reduce or cancel the amount owed; under the EU VAT Directive such an amending document is treated as an invoice.
What should a credit note contain?
Requirements vary by country; check local VAT rules with your accountant.
- The words credit note and a unique number.
- The date and a clear reference to the original invoice.
- Seller and buyer details, including VAT numbers where required.
- The items or amounts credited and the VAT being corrected.
What is the difference between a credit note and a refund?
A credit note is an accounting document; a refund is a payment. A credit note can lead to a refund, or the credit can be used against the customer's next invoice.
How do credit notes connect to payments?
Link each credit note to the refund that settles it so your books and payment reports match. OrsunPay is a payment orchestration platform: you keep your own contracts with licensed providers (for example Stripe, Adyen or Worldpay), and OrsunPay is not a payment institution, acquirer or merchant of record and does not hold or transmit funds. OrsunPay records refunds across your connected providers with your references for reconciliation. For OrsunPay pricing, see the pricing page at /pricing.
Frequently asked questions
Is a credit note the same as a credit memo?
Yes, credit memo is the common US term for the same document.
Can I delete an invoice instead of issuing a credit note?
In most EU countries no: issued invoices are corrected with a credit note, not deleted.
Does a credit note mean money is returned?
Not necessarily; the credit can also be offset against future invoices.