Credit note vs Refund

What is credit note?

A credit note is a document that lowers the amount owed — used to correct an overcharge, a return, or an agreed discount. The credit can offset a future invoice instead of moving any money.

What is refund?

A refund is an actual return of funds the customer already paid. It's used when there's no future invoice to offset or when the customer wants their money back.

Credit note vs Refund: the key differences

Here's how credit note and refund differ at a glance:

• Money movement — a refund returns cash; a credit note usually doesn't.
• Use — credit note offsets future invoices; refund repays past payment.
• Records — both keep your books accurate without editing the original invoice.

Handle it all with Invco

Invco is an AI invoicing assistant that takes care of invoices, totals, and tax for you. Design a custom template, then let Claude create and send invoices on it in plain English — every invoice numbered, calculated, and tracked from sent to paid. Start free with one company.