Creating sales credit notes in Xero

Xero has multiple ways to raise sales credit notes for your accounting records. They have two versions of their data input screen which we will detail the use of here. 

New Invoicing In Xero

Creating a credit note from the associated invoice

If you have an awaiting payment invoice to be credited, create the credit note from the invoice. The credit note can be for some or all of the outstanding amount of the invoice.
1. In the Business menu, select Invoices.
2. Click the Awaiting Payment tab, then find and open your invoice
3. (Optional) If the invoice opens in classic invoicing, click Switch to new invoicing at the bottom of the invoice.
4. Click the menu icon (three dots), then select Create and apply credit.
5. Check the details on the credit note, make changes if needed, then click Approve.

Once you've approved the credit note, you'll be taken back to the invoice, showing the amount credited and any remaining balance.

Adding a sales credit from the sales overview

1. In the Business menu, select Sales overview.
2. From New, click the arrow and select Credit note.
3. Enter the credit note details. You’ll notice the fields are like entering information into an invoice.
4. (Optional) Click the file icon to upload files related to the credit note.
5. Click:
○ Approve to save the credit note as awaiting payment
○ Save to save it as a draft
○ Save & submit for approval to have another user approve the credit note
6. If you’ve approved the credit note and have an awaiting payment invoice for the customer, you'll be prompted to apply the credit. You can either enter the amount to credit and click Allocate Credit or click Cancel to allocate the credit note later.

Classic Invoicing in Xero

Create the credit note from the associated sales Invoice

If you have an awaiting payment invoice to be credited, create a credit note from the invoice. The credit note can be for some or all of the outstanding amount of the invoice.
1. In the Business menu, select Invoices.
2. Click the Awaiting Payment tab.
3. Find and open the invoice you want to credit.
4. Under Invoice Options, select Add Credit Note.
5. Confirm the credit note details and edit them if you need. You can click the x to remove a line item.
6. Click Approve to approve the credit note and automatically allocate the credit to the invoice. Or click Save to allocate the credit later.

Adding a sales credit from the sales overview

1. In the Business menu, select Sales overview.
2. From New, click the arrow and select Credit note.
3. Enter the credit note details. You’ll notice the fields are like entering information into an invoice.
4. (Optional) Click the file icon to upload files related to the credit note.
5. Click:
○ Approve to save the credit note as awaiting payment
○ Save to save it as a draft
○ Save & submit for approval to have another user approve the credit note
6. If you’ve approved the credit note and have an awaiting payment invoice for the customer, you'll be prompted to apply the credit. You can either enter the amount to credit and click Allocate Credit or click Cancel to allocate the credit note later.