Credit Note

A credit note is a document that lowers what a customer owes on a finalized invoice. Most tax systems don't let you edit a finalized invoice. You issue a credit note against it instead, and the correction is recorded with a link to the original invoice.

When to issue one

• You billed the wrong amount.
• A customer returns a product or cancels part of an order after you sent the invoice.
• You want to give a goodwill discount or waive a charge you already invoiced.

A credit note can cover the whole invoice or only some line items.

How Stripe handles it

In Stripe, you create a credit_note against a finalized invoice. On an unpaid invoice, the credit note lowers the amount due. On a paid invoice, you split the credited amount across three options, which must add up to the credit note total:

1. refund_amount returns money to the customer's payment method as a refund.
2. credit_amount adds to the customer's Stripe balance, which Stripe applies to their next invoice.
3. out_of_band_amount records a credit you settled outside Stripe, such as a manual bank transfer.

Credit note vs refund

A refund moves money back to the customer. A credit note records that the amount owed went down. It may come with a refund, or it may add a credit to the customer's balance instead. For a partial refund on an invoice, the credit note records the reduction and the refund returns the money. Credit notes also reverse recognized revenue for the corrected line items.