Credit Note Template
A credit note cancels or reduces an invoice you've already issued — for a return, an overcharge or a cancellation. It's not just a negative invoice: it must reference the original invoice, state the reason and show the tax credited. This free credit note template does all three — download the format in Word or Excel and adjust the filled sample amounts.
Last reviewed 2026-07-22
Template preview
- From:
- Your Business · you@email.com
- To:
- Client Name · client@email.com
- Credit note #:
- CN-0021
- Against invoice:
- INV-0188 (2026-06-20)
- Date:
- 2026-07-08
| Description | Qty | Unit price | Amount |
|---|---|---|---|
| Returned item — Product A | 2 | $50.00 | −$100.00 |
| Overcharge correction — shipping | 1 | $15.00 | −$15.00 |
| Subtotal credited | −$115.00 | ||
| Tax credited | −$9.20 | ||
| Total credit | −$124.20 | ||
How to fill in each field
Original invoice reference
Reference the exact invoice number and date being credited so both ledgers can net the two documents; for partial credits, name the specific lines being adjusted.
Common mistake: A credit with no invoice reference that accounts can't match, so the customer's balance stays wrong.
Reason for credit
State the reason plainly — returned goods, overcharge, cancelled service, agreed discount — because the reason drives both the customer's approval and your own sales-return reporting.
Common mistake: Vague reasons like "adjustment", which invite queries and delay the credit being accepted.
Unique credit note number
Number credit notes in their own sequential series, separate from invoices, so your records stay complete and auditable.
Common mistake: Reusing invoice numbering or no number at all, breaking the audit trail.
Tax credited
Show the tax portion of the credit explicitly, at the same rate as the original invoice, so both sides can adjust the right tax amount.
Common mistake: Crediting a gross amount with no tax breakdown, which corrupts both parties' tax returns.
Read the full guide
Credit Notes: What to Include, How to Write One, and Common Mistakes Learn what to include in a credit note, how to write one step-by-step, and avoid common mistakes. Practical guide for business owners and freelancers. Read the guide →Related templates & variants
A credit note reverses an invoice. To bill in the first place use the invoice template; to confirm a payment received use the receipt template.
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Frequently asked questions
What is a credit note?+
A credit note is a document issued by a seller to cancel or reduce a previously issued invoice — for returns, overcharges or cancellations. It references the original invoice and reverses the relevant amount, including tax.
What should a credit note include?+
Your business and the customer, a unique credit note number, the original invoice reference and date, the items and reason for the credit, the amount credited and the tax reversed.
Is a credit note the same as a refund?+
Not exactly. A credit note reduces what the customer owes (or records a credit for future use); a refund is the actual return of money. A credit note often precedes or documents a refund.
Can I get this credit note format in Excel?+
Yes — download it as an Excel sheet so the credit total and tax calculate from your line items, or as a Word document you can save as a PDF.
Sources & further reading
- What is a credit note in accounting? (Stripe)— stripe.com
- Credit note: meaning, format & examples (Zenskar)— zenskar.com
We review authoritative guidance when building each template. Links are for reference only.