What is a credit note?

A credit note is a document that reduces or cancels an amount a client owes you. It corrects or reverses an invoice — fully or partially — without deleting the original, so your records stay honest and traceable.

Why credit notes exist

Once an invoice is sent, it becomes part of your financial history. You generally don’t want to quietly delete or rewrite it, because that erases the trail your future self (and your accountant) relies on. A credit note is the clean way to say “this amount no longer applies” while leaving the original invoice visible.

You’ll reach for one in a handful of common situations:

• You billed for work that was later cut from scope.
• You made a pricing or quantity mistake on an invoice that’s already gone out.
• A client paid, and you’ve agreed to give some or all of it back.
• You want to cancel an invoice the client should never have received.

A real-world example

Say you invoiced a client $1,200 for a logo plus a set of social templates. Halfway through, they drop the templates — worth $400. The original $1,200 invoice already exists in your books. Instead of editing it into something it never was, you issue a credit for $400. The net owed becomes $800, and anyone looking back can see exactly what changed and why. If they’d already paid the full $1,200, that same $400 would flow back to their card as a partial refund.

Tip: Think of a credit note as the opposite of an invoice. An invoice adds to what a client owes; a credit note subtracts from it. Keeping both on the record is what makes your numbers reconcile cleanly at tax time.

How Fee-Lion handles it

Fee-Lion has real credit notes, numbered CN-0001 onward, under Invoices → Credit notes.

1. Choose Credit note, pick the client and, if it relates to one bill, the invoice.
2. Add the lines being credited (a returned part, an overbilled hour), any tax, and a reason.
3. Issue it, then apply it to one or more of the client’s open invoices. Each invoice shows “Credits applied” and a lower balance due.
4. Anything you don’t apply stays on the client’s account for a later invoice.

To return money a client already paid by card, open the payment and choose Refund, for the full amount or part of it. You can also choose to issue the refund as a credit note instead, keeping the value on the client’s account rather than sending it back to the card.

Credit notes, refunds and payments all appear on the client’s customer statement, and the accountant export includes your credit notes. A note can be voided only while nothing is applied from it.

Tip: Refund rules and how returns appear on a client’s statement can vary by location and card issuer. If you’re unsure how a reversal should be documented for tax purposes, check with your accountant — Fee-Lion keeps the record, but they’ll know how it should be reported.

What’s next

• Issue a refund
• Refund vs partial refund: when to use each
• Void or cancel an invoice
• Invoice statuses explained