A credit note, also known as a credit memo, is a commercial document issued by the seller and sent to the buyer when there is a reduction in the amount payable to the seller. By issuing a credit note, the seller promises to pay back the reduced amount or adjust it in a subsequent transaction.

What does receiving a credit note mean?

A credit note (also known as credit memo) is issued to indicate a return of funds in the event of an invoice error, incorrect or damaged products, purchase cancellation or otherwise specified circumstance.

Why would a supplier issue a credit note?

A credit note is a document given by one party to another mentioning that the sender credits the other party's account in his books. After the supplier's issue of the tax invoice, if there is any reduction in the taxable value of the goods supplied, he may issue a credit note mentioning the prescribed particulars.