Credit Note, Debit Note
Issuing a credit note is almost the reversal of issuing an invoice. The customer must receive a copy in order to repay any VAT claimed, and you can recover any VAT paid. Credit notes, as with invoices, must have a sequential numbering system.
Debit or credit notes to be raised by one party and received by the other within one month of being discovered or agreed: further, in the ''details' section of the note, a reference to the reason for the note ('damaged goods', 'not delivered/received') the invoice number and date (see section 7. HM Customs & Excise 'The VAT Guide' for full details).
The answer to most of these problems is to have a simple, effective and efficient system for customers to inform you of the issue at hand. For instance: if your customer gets a short delivery or goods are damaged in transit or the customer no longer requires some part of your goods/service, the customer (with your carefully considered authority) can issue a debit note to you for the amount in 'dispute'.
|Customer sends to you
|Debit Note for damaged goods
The original invoice remains the same: which ensures there is no delay due to the customer notifying you of the damage, and you then having to send either a credit note or a new invoice, prior to payment. Or you having received the £270.00 cheque and trying to find out why it is £30.00 short of the invoiced amount.
You may encounter a customer who insists on the use of debit notes. If used sensibly the debit note is a great advantage to both parties.
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