Navigation:  Sales Invoices > Handling customer returns

When customer returns goods, you will need to issue new document called Credit note.

The easiest way is to create credit notes out of existing invoice. Go to Sales Invoices tab.

Click View button on sales invoice which originally sold returned goods.

Then click Copy to... button to create new credit note from existing sales invoice.

This way you don't need to re-enter all information manually. If your customer is to receive full refund, then you shouldn't change any amounts on credit note so credit note total equals to total on original sales invoice.

If customer is receiving partial refund, you can decrease amounts on credit note or remove line items for which customer is not receiving a refund.

After you issue credit note, the credit amount will be applied to original sales invoice. So if the customer didn't pay for their sales invoice yet (or paid partially), they will owe you less (or nothing if credit note total was the same as the amount due).

If you are applying credit note to already paid sales invoice. The credit from credit note will be applied to Customer credits account which will be automatically applied to the next invoice you issue to this customer.

In case customer wants to refund these customer credits, you will need to record one more transaction which will decrease your cash or bank balance and clear their customer credit.

For example, if they are being refunded cash:

Go to Cash accounts tab.

Click on Balance amount under cash account from which you are refunding customer.

Record new transaction by clicking on Spend money button.

Select account Customer credits, then select customer. Then enter the amount customer has received.

Save the transaction by clicking Create button.

When cash refund is recorded, you will notice balance under Customer credits will decrease by refunded amount.

Follow the similar steps if they are being refunded from bank account or through expense claims.