Free Credit Note Template

Sent an invoice with a mistake, or did a client return goods or get a discount afterwards? Don't edit or delete the original invoice. Issue a credit note: a document that reduces or cancels the amount on an earlier invoice and keeps your records and VAT return correct.

When to issue a credit note

The invoice amount, VAT rate or quantity was wrong
Goods were returned or a service was not delivered
You agreed a discount or refund after invoicing
The invoice was sent to the wrong customer and must be cancelled

What a credit note must contain

The title "Credit note" and its own unique number and date
Your name, address and VAT number, and the customer's name and address
The number and date of the original invoice
A description of what is credited, with the quantity and amount for each item, and (good practice) the reason
The amount credited excluding VAT, the VAT rate and the VAT credited

HMRC lists these details for UK credit notes, and in the EU a document that amends an earlier invoice and refers to it specifically is treated as an invoice (Article 219 of the VAT Directive). Use the same VAT rate as the original invoice.

Numbering

Give credit notes their own series, such as CN-2026-001, or continue your main sequence, depending on your country's rules and your accountant's preference. Never reuse the original invoice number.

Full or partial credit

To cancel an invoice completely, credit the full amount and, if needed, send a new correct invoice with a new number. For a partial correction, credit only the difference.

Create a credit note with Billowly

Choose Credit note as the document type: the PDF is titled "Credit note" and the total reads "Total credited".
Enter the credited lines with positive amounts and the same VAT rate as the original.
Write "Credit for invoice INV-2026-014 dated 3 Oct 2026: [reason]" in the notes.

Official sources

Checked against these sources in October 2026. Rules and rates change, so confirm with the tax authority or an adviser before relying on them. General information, not legal or tax advice.

FAQ

Can I just edit an invoice I already sent?

No. Once an invoice is issued it should stay unchanged in your records. Correct it with a credit note and, if needed, a new invoice.

Does a credit note need its own number?

Yes. Give it a unique number and always refer to the original invoice number and date.

Is a credit note the same as a refund?

No. A credit note reduces what the customer owes. If they already paid, you can refund the amount or offset it against a future invoice.

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