What is a Credit Note?

01:05, 12/07/2024

In commerce, a Credit note is a type of document commonly used when the buyer does not receive the goods, or the customer returns the goods due to damage or defects.

Credit note, also known as a credit memo, is a type of commercial document that the seller uses to sell to the buyer for an amount typically less than or equal to the amount on the invoice.

Through a credit note, the seller can indirectly interact with the buyer, stimulating the buyer (customer) to return for future purchases/services.

In certain cases where customers overpay for goods compared to the amount on the invoice, the credit note will serve as the basis for refunding the excess amount or when customers return goods, the seller can refund in cash, exchange for other goods of equivalent value, or use the credit note for the customer to use in future purchases.

There are 4 cases in which a credit note is used:

- An exaggerated amount on the invoice,- An accurate discount rate was not applied,- Product damaged within the warranty period,- Product does not meet the buyer's specifications and is returned.

However, it is necessary to distinguish between a credit note and a debit note. Accordingly, the credit note is issued by the seller while the debit note is issued by the buyer to request the supplier to issue a credit note, to adjust the increased value of the previous invoice.

In reality, commercial activities in Vietnam do not use either of these documents.

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- The legal regulations in this article are according to Vietnamese Law;
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