What Is A Credit Note.If you own a business, this article will help you see the benefits of accounting, and it will also provide you in detail about what a credit note is and its characteristics . We also explain when and why a credit note is prepared, the requirements to prepare it and its importance in a company.
What is a credit note?
The credit note is a commercial document issued by the seller, here the reasons why a buyer has a credit in their favor are broken down . A credit note empowers an organization to handle errors in delivered invoices, conferring an amount in favor of customers.
However, the process of the credit note does not consist exclusively in its preparation , since it is not a one-way accounting mobility of a selling company. This differs from a debit note that assumes a balance in favor of the company, while a credit note structures the balance in favor of the customer.
Characteristics of a credit note
According to what was explained above, the credit note has very relevant characteristics, here we show them in a simple way.
- Credit capacity shows the balance or amount of money that is repaid to the customer as a surplus in their favor.
- The balance that is recorded on the credit note is no longer part of the company .
- When a credit note is made, a copy of the receipt that is being revoked is made and sent to the buyer.
- The note has an accounting focus because a priori operations are totally or completely revoked.
- Once this note is sent to the client, it is considered notified.
When is it made?
- Provide a deduction to the customer, which was clearly not specified on the initial receipt.
- A credit note is made because an error has been made in the formulation of the receipt in relation to prices or in the dispatch of goods.
- In case of deliveries of defective or incomplete items, the credit note comes out, to apply a return of the same.
- Cancellation and bonus to the user .
What is needed to be able to make a credit note?
As a general rule, an invoice or credit note must be composed of fundamental elements, so that it is valid in this way.
- Complete information about the company that issues this invoice, such as the name of the organization that sells and detailed customer data.
- Correctly fill in the date by which the credit note is issued.
- Have the corresponding invoice or document number.
- Detailed review of the items that have been purchased by the user plus the corresponding amounts.
- Make a brief explanation, with the reason for which the credit note is made.
- Specify the taxes generated by the payment made.
- Finally , the amount credited to the user must be reflected .
Importance of a credit note
This is a document widely used in the commercial area , hence its prominence, since it is the most effective method to cancel another invoice.
Given the law and regulations imposed by the commercial system imposed by a country, it is important that this type of process is carried out. This requirement is important, to avoid a mismatch considered in the sheet that is sent to the Internal Revenue Service . It should be noted that, for each electronic or physical invoice, its numbering must be taken into account, since this favors business accounting.
In this order of idea, we understand that a credit note should never be considered less important, before other financial documents. In addition, if a company wants to maintain a fixed and stable order in accounting, it will have to carry out this process reliably. On the other hand, a company that applies strategic planning can correctly handle the required tax requirements, avoiding future tax problems.
