Credit memos and customer credit
Issue credit memos for returns, discounts, or billing errors, apply them to open invoices as customer credit — without editing the original invoice. Cash refunds use the Customer refunds workflow.
- Plans
- Core and above
- Availability
- Available
- For
- Bookkeepers
- In KontoCore
Sales → Credit memos
Refunding a credit uses the Customer refunds workflow (Built – unverified).
What this does
A credit memo reverses all or part of a sale: revenue, sales tax, and (for inventory) cost. It creates customer credit you apply to open invoices. To pay credit back, use Customer refunds (Built – unverified, prelaunch).
The original invoice stays intact so history explains what happened.
How to
Issue and apply
- 1Open Sales → Credit memos → New, choose customer and (optionally) the original invoice.
- 2Add the lines being credited and post.
- 3Apply it to an open invoice.
Statuses and lifecycle
| Status | Meaning |
|---|---|
| Open | Credit available. |
| Applied | Used against invoices. |
Corrections, voids, and reversals
- Void a credit memo to restore the invoice balance.
Permissions
- Owners, administrators, and users with bookkeeping permission can create and post. View-only users can read but not change records.
What happens in your books
Revenue and receivable decrease.
| Account | Debit | Credit |
|---|---|---|
| Sales returns / revenue | 200.00 | |
| Accounts receivable | 200.00 |
Common mistakes
- Editing a posted invoice to lower it instead of crediting it.
- Recording a refund as an expense.
Troubleshooting
Credit not showing on invoice
It was posted but not applied. Open the credit and choose Apply.
Terms used:Credit memo
Related articles
Customer payments and depositsReceive customer payments against one or more invoices, handle partial and over-payments, group them into bank deposits, and match deposits to bank lines.Customer refundsPay money back to a customer from available credit, an overpayment, or an unused deposit, choosing the paying account and method — never as an expense.Estimates and invoicesSend estimates, convert them to invoices, set terms and tax, and understand what an invoice does in your books.Customer payments and credit memosReceive payments against invoices, handle partial payments and overpayments, and issue credit memos.Sales taxSet up tax agencies and rates, charge tax on sales, and record returns and payments.
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Last reviewed October 6, 2026