Credit memos and refunds

Credit a customer for a return or an error, then apply it to an invoice or refund it.

Sales → Credit memos.

A credit memo reverses revenue and, if it has inventory lines, puts stock back. It is the correct tool for a return, a billing error, or a goodwill allowance.

Once issued, you can:

• Apply it to one or more open invoices for that customer.
• Refund it — pay the money back, which posts against your bank account.
• Leave it open as a credit on account, where it shows on the customer's statement and the collections worklist.

Do not confuse it with:

• Voiding an invoice — for a document that should never have existed. See Writing off a bad debt.
• Writing off a bad debt — the customer owes it but will not pay. That is a bad-debt expense, not a reduction of revenue.

The purchases-side equivalent is Vendor credits.