Invoices and documents
Credit note
A credit note is an e-invoice that reduces or cancels an invoice you have already issued, for example after a return or the correction of an overcharged price. It points to the original invoice and states the reason for the change clearly, so that it can be traced.
What it means
Sooner or later a customer returns something, or you discover you charged too much. An issued invoice is not rewritten; you issue a credit note instead. It is an e-invoice in its own right, so like any other it is numbered in sequence, and it names the original invoice and gives the reason: a returned item, a discount agreed after the sale, or a pricing error.
For a business owner the point is that your books and ZATCA tell the same story. A cafe that refunds a customer for a wrong order, or a wholesaler that takes damaged cartons back from a shop, records a credit note against the original invoice. The correction stays visible and traceable instead of vanishing into a cash adjustment. Your accountant does not have to dig through papers to understand why the amount went down.
Under Phase 2 a credit note follows the route of the invoice it corrects: one against a standard invoice is cleared, and one against a simplified invoice is reported. A return at the till is therefore not treated as a separate transaction; it follows the path of the sale it came from. Fatooraz issues credit notes with a QR code and sequential numbering. Whether Phase 2 applies to you yet depends on your wave.
In practice
- Issue a credit note for every return, refund or downward price correction.
- Link the credit note to the original invoice and write a clear reason.
- Never delete or overwrite an issued invoice in order to fix it.
- Keep each credit note beside the invoice it corrects, so the records read together.
Questions about Credit note
When should I issue a credit note instead of a new invoice?
Issue a credit note when something already invoiced needs to come down: a return, a cancelled sale, an overcharge or a discount agreed afterwards. It ties the correction to the original invoice. If you undercharged instead, the amount has to go up, and that is the job of a debit note.
Does a credit note have to be sent to ZATCA?
In Phase 2, yes: it is an e-invoice like any other, so noting the return in the till's cash book alone is not enough. It is cleared or reported along the same route as the invoice it relates to, depending on whether that was a standard or a simplified invoice. Whether this applies to you now depends on your wave, so check ZATCA's announcements.
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