A credit note, or credit memo, is the document a seller issues to reduce what a customer owes on an invoice that's already gone out. You issue one when cases arrive damaged, when something invoiced didn't arrive, when goods come back, or when a price on the invoice was wrong. It doesn't change the original invoice. It sits beside it: its own number, the invoice it refers to, the lines being credited with their quantities and prices, the reason, and the total credit. The customer then pays the invoice less the credit, or keeps the credit against the next order, or you refund it. The reason matters as much as the number, because the same reason turning up every month is something to fix in the packing room. In the example below, a taro products maker issues a credit for one crushed case and two missing bags.
The short version
- A credit note reduces what a customer owes on an invoice already sent.
- Issue one for damaged goods, short deliveries, returns and pricing mistakes.
- Don't edit the original invoice; the credit note refers to it.
- On it: its own number and date, the customer, the invoice number, each credited line, the reason, the total.
- The customer deducts it from the invoice, keeps it for the next order, or you refund it.
- Keep the reasons: the same one twice is a pattern.
- TaroStack records returns back into the lot they left in, with the reason. More below.
What goes on a credit note
| Part | What to write |
|---|---|
| The words "Credit note" | At the top, so it isn't mistaken for an invoice |
| Credit note number and date | Its own sequence: CN-2026-014 |
| Customer | As on the invoice |
| Invoice it refers to | The original invoice number and date |
| Lines | Item code, description, lot, quantity credited, unit price, line total |
| Reason | Damaged, short, returned, price correction |
| Total credit | What comes off |
| How it's applied | Deducted from the invoice, held against the next order, or refunded |
The invoice it's paired with is in wholesale invoice template, and the order behind both in sales order template.
An example: a crushed case and two missing bags
Windward Roots, the made-up taro business I use in these examples, delivered Mānoa Grocer's order on October 22 and invoiced it, invoice 2026-118, for $390.72. Two days later the grocer's receiving clerk reported a problem, inside the two days the invoice allows:
| Item | Description | Lot | Credited | Unit price | Line total | Reason |
|---|---|---|---|---|---|---|
| KUL | Kūlolo, 8 oz pack, case of 12 | KUL-1020-1 | 1 case | $60.00 | $60.00 | Case crushed in delivery |
| TC-5 | Taro chips, 5 oz bag | TC-1016 | 2 bags | $3.89 | $7.78 | Short in a case |
| Total credit | $67.78 |
Credit note CN-2026-014 refers to invoice 2026-118, so Mānoa Grocer paid $322.94, the invoice less the credit. The crushed kūlolo was thrown away at the store, and the clerk's photo is filed with the credit note. The two short bags came from a case packed by hand at the end of a long run, so the packing table now weighs each case before it's taped, which catches a missing bag in a second. How a batch's count goes short is in batch yield formula.
Get the template
Download the credit note template. One sheet: shaded cells for the credit note number and date, the customer, the invoice it refers to and how it's applied, and each line's item code, description, lot, quantity and price; the line totals and the total credit work themselves out, with a line for the reason. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The credit note settles the money. The stock is a separate question: the crushed case came off the shelf count, the two bags were never there, and a returned case might go back to sell again. A spreadsheet of credits doesn't move any of that.
How TaroStack does it
TaroStack doesn't issue credit notes. It keeps the stock side of them straight.
Returns into their lot. Goods a customer sends back are received back into the lot they left in, so a returned case is stock again, with its best-before date.
Every adjustment has a reason. Damaged, expired, sample or customer return: each adjustment carries its reason, so waste can be reported by reason, item and site, and a pattern shows.
Lots on every delivery. Each delivery note lists the lots that went, so "the kūlolo from KUL-1020-1" is on record before the store calls.
| The job | Folder of credits | In TaroStack |
|---|---|---|
| A returned case back on the shelf | Retyped into the count | Received back into its lot |
| Why stock was written off | A note, sometimes | A reason on every adjustment |
| Which lot a complaint is about | The invoice, if it says | The lot on the delivery note |
Lots, returns and adjustments with reasons are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.