How to Create a Credit Note and Process a Refund

This article explains how to create a credit note in the system to process a refund for a customer. A credit note is generated automatically when the total invoiced amount is greater than the current booking value.

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Steps

Phase 1: Prepare the Booking for the Refund

1. Determine the refund amount — decide how much you want to refund the customer
2. Remove the automatic damage waiver if you use one — the automatic damage waiver recalculates every time the booking changes, which will interfere with the credit note amount. Before removing it, note the damage waiver amount (for example, 60p or $0.60).
   • To remove it: set the damage waiver percentage to 0 and press Enter or Save
3. Add the damage waiver back as a manual custom line item — click Add Line Item → Custom Item → label it Damage Waiver → enter the original amount. Because it is now a fixed manual amount it will not recalculate and will not affect the credit note.

Phase 2: Add the Credit Note Line Item

1. Click Add Line Item — in the quote builder
2. Click Custom Item
3. Label it Credit Note — or a description that makes sense for the customer
4. Enter the refund amount excluding tax with a minus sign — for example, -5. The minus makes the booking value lower than the invoiced amount, which triggers the credit note.
   • ⚠️ Important: Enter the amount excluding tax. The system will add the applicable tax (VAT, GST, or other) on top automatically.
5. Press Enter or Save — a credit note will now be generated in the system

Phase 3: Issue the Refund and Send the Credit Note

1. Issue the refund to the customer — this is done outside the system, usually by bank transfer
2. Mark the credit note as paid — once the refund has been sent, record the date it was issued
3. Send the credit note to the customer — click Download to get a PDF, or click Send to Customer to send it directly from the system

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🎥 Video Guide

How to Create a Credit Note and Process a Refund — 4:15 https://www.loom.com/share/756b01bf456141a0a3c95593d45ff49

Video timeline:

• 0:00 — When a credit note is generated and how it works
• 0:40 — Why you need to remove the automatic damage waiver first
• 1:35 — How to remove the damage waiver by setting it to 0%
• 2:04 — Adding the damage waiver back as a manual custom line item
• 2:19 — Adding the credit note as a custom line item with a minus amount
• 2:58 — How tax is applied to the credit note amount
• 3:19 — Issuing the refund and marking the credit note as paid
• 3:38 — Downloading or sending the credit note to the customer

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⚡ Quick Answer

Solution: Note damage waiver amount → set damage waiver to 0 → add damage waiver back as manual custom item → Add Line Item → Custom Item → label Credit Note → enter minus refund amount ex-tax → Save → credit note is generated → issue refund → mark as paid → send to customer Time: 5–10 minutes Video: 🎥 How to Create a Credit Note and Process a Refund (4:15)

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❌ If It's Not Working

Problem	Why It Happens	Solution
Credit note is not being generated	The booking value is not lower than the invoiced amount	Make sure the minus amount on the credit note line item is reducing the booking total below the invoiced amount
Credit note amount is wrong	Automatic damage waiver is recalculating and affecting the total	Remove the automatic damage waiver, add it back as a manual fixed custom line item, then re-enter the credit note amount
Tax is being applied unexpectedly	The system adds tax to the ex-tax amount entered	Enter the refund amount excluding tax — the system will calculate and add the correct tax automatically

Need more help? Contact our support team and include:

• The booking name and the refund amount you are trying to issue
• Whether you use an automatic damage waiver
• A screenshot of the invoicing section showing the current invoice and booking totals

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When You Need This

This helps when:

• You need to issue a full or partial refund to a customer
• A customer has overpaid and you need to return the difference
• You need a credit note document to send to the customer as a record of the refund

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Questions this article answers

• How do I create a credit note?
• How do I process a refund for a customer?
• Why is my credit note not generating?
• What does a credit note do in the system?
• How do I issue a partial refund?
• Why do I need to remove the damage waiver before creating a credit note?
• How do I send a credit note to a customer?

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Related Articles

• How to create and send an invoice
• How to mark an invoice as paid
• How to use the Invoicing Report

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Problem Context

This article is relevant when a user:

• Needs to refund a customer and create a formal credit note record in the system
• Is trying to generate a credit note but it is not appearing

You'll know you need this article when:

• A user asks how to issue a refund or create a credit note
• A user says the credit note is not being generated despite following the steps

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🤖 AI AGENT REFERENCE — FOR INTERNAL USE

• Intent: User wants to issue a refund to a customer and generate a credit note in the system
• Keywords: credit note, refund, partial refund, damage waiver, custom line item, minus amount, booking value, invoiced amount, mark credit note as paid, send credit note, ex-tax, VAT
• Confidence: Recommend this article when the user mentions "credit note", "refund", "partial refund", "credit note not generating", "damage waiver refund", or "how do I give a customer their money back"
• Escalate when: User has followed all steps correctly and the credit note is still not appearing, or the credit note amount does not match the intended refund after tax has been applied