Enter customer credit notes

This is where you enter details of credit notes that you've produced outside Sage 200 and sent to your customers. If you want to print a credit note from within Sage 200 to send to your customers, use the Invoicing module.

Find this screen

Open: Customers > Enter transactions > Sales Credit Note.

How to

Record a credit note?

  1. Choose or enter the customer account using the Code, Short name or Postcode.

  2. Enter the following:

    Credit note Defaults to today's date
    Reference The credit note number.
    Second Reference An additional reference number if required
    Checks whether you've already entered a credit note with the same date and reference number.
    Goods Value The net credit note amount.
    Nominal Analysis - Code The nominal account for the goods value.

The remaining fields display the defaults set on the customer account. You can change these defaults when required.

Due date

This is calculated from the payment terms set on the customer account.

Discount percent and Discount value

Displays the settlement discount set on the customer account.

VAT analysis

Displays the default VAT rate set on the customer account.

Nominal Analysis

Displays the default nominal account set on the customer account.

Enter a foreign currency credit note?

When you select a foreign currency customer account, an additional exchange rate box is displayed.

Enter the following additional details:

Goods value

Enter this in the same currency as specified on the credit note.

This should be the same as the currency on the customer's account.
Exchange Rate

Click to change this.

This defaults to the rate set on the Currencies and Exchange rates screen.

Triangulated

Select this is if required.

This makes sure that the transaction is marked with the required indicator on the EC Sales List.

Triangulation is the term used to describe the supply of goods between EU countries that involves three parties.

For example, a UK company receives an order from a customer in Germany. To fulfil the order the UK company purchases the goods from their supplier, based in France. The goods are delivered directly from the French supplier to the German customer.

The invoice for the goods is sent to the German customer from the UK company.

As the goods do not enter the UK, an indicator must be placed on the EC Sales List to show that the sale represents a triangulated transaction.

To mark sales as triangulated on the EC Sales List in Sage 200, you must select the Triangulated check box when entering the following types of transaction:

Module Type of transaction
Sales Ledger

Invoice

Credit Note

Batch Invoice

Batch Credit Note
Sales Order Processing

Sales Order | Delivery and Invoicing

Sales Return | Return and Credit

Quotation | Delivery and Invoicing

Pro forma | Delivery and Invoicing

Use more than one VAT rate?

If your invoice uses more than one VAT rate, you add them in the VAT analysis section.

You enter the total Net and VAT amount for the invoice in the Transaction details section.

In the VAT Analysis section, enter the following details:

  1. Code - Enter the VAT rate or select it from the drop-down list.
  2. Goods value - Enter the amount the VAT rate applies to.
  3. VAT value - Enter the amount of VAT.

For another VAT rate, click to add a new line and repeat.

Make sure the Totals in the VAT Analysis section match the Goods Value and VAT Value in the Transaction details section.

Use multiple nominal accounts?

If you want to post an invoice to more than one nominal account, you can do this in the Nominal Analysis section.

You enter the total Goods (net) value in the Transaction details section.

In the Nominal Analysis section, enter the following details:

  1. Code - The nominal account. Select one from the drop-down list.
  2. Goods Value - Enter the amount that you want to post to the nominal account.

For another nominal account, click to add a new line and repeat.

Make sure the Totals in the Nominal analysis section match the net credit note amount (Goods value) in the Transaction details section.

Useful info

About credit limits

You can specify a credit limit on the customer account. When the balance on the customer's account is more than the credit limit, the Available Credit box is highlighted and you'll see a warning message when you try to save the invoice.

This just lets you know that your customer has gone over the limit. You can still save the credit note.

Your customer has a credit limit of £1000. The customer's account balance is currently £1100. When you select the customer account, the Available Credit is highlighted and a message warning you about the credit limit is displayed.

About settlement discounts

A settlement discount is where you offer a discount if your customer pays an invoice early. You usually specify the number of days the invoice has to be paid within to qualify for the discount.

If the invoice is paid within the agreed number of days, then you allow the full discount value when you enter the payment.

  • In the UK, if the invoice is paid within the settlement discount period, VAT is only charged on the discounted amount (Goods value minus Discount value).

  • In Ireland, VAT is calculated at the goods value regardless of any settlement discount.

  1. Enter the invoice. Include the settlement discount details on the invoice. The full invoice value is posted to the customer's account.

  2. Enter the receipt. If your customer qualifies for the discount when they pay the invoice, they'll pay you the invoice total minus the discount amount. You enter this as the Cheque value and you also enter the amount of the discount.

    The discount is added to the amount received to make sure that payment matches the invoice. This is posted to the customer's account and the Debtors Control Account.

    The amount received is posted to the bank account and the discount amount is posted to the Discounts Taken nominal account.

    For example, for an invoice of £119 with a £5 settlement discount, enter the payment amount as £114 and discount amount as £5.

You offer a settlement discount of 5%:

  1. You record the details of an invoice for £100. VAT is calculated at £20. You enter the discount percentage and amount which is £5.
  2. You receive payment for the invoice within the specified period and the customer has taken the discount, so they pay you £114. This is the gross amount (£120) minus the net discount (£5) and the discounted VAT (5% x 20 = £1).
  3. You record the receipt and enter the cheque value as £114 and add the discount value as £5. This creates a transaction value of £119.
  4. You allocate the invoice (£120) to the receipt (£119). The VAT discount of £1 is still outstanding
  5. You create a credit note for the VAT discount of £1.
  6. You allocate this to the remaining balance on the invoice.
Transaction Nominal Account Debit Credit
Invoice Debtors Control 120  
  Net   100
  VAT   20
Receipt Discounts Allowed 5  
  Bank Account 114  
  Debtors Control   119
Credit Note Debtors Control   1
  VAT 1  

To make sure that the settlement discount details are always entered when credit notes are entered for a customer, you can add the settlement discount details to the customer's account (Payment Terms tab). The Discount percent, Discount Days are then automatically applied each time you enter an credit note for this customer.

You can change the discount details when entering an individual credit note if you need to. This does not update the customer's account. If you change the Discount Value, the Discount Percent is updated and vice versa.

Fix it

What if I make a mistake

To maintain the integrity of your data, you can't delete transactions once they're posted. However, you can make corrections which creates a reverse transaction with the same details as the original and a new transaction with your changes.

See Correct posted customer transactions

Why is the invoice date highlighted in red?

This is because the credit note date does not fall within any of your accounting periods.

Check the date and try again.

What happens when I

Save a credit note?

The nominal account and customer account are updated immediately, unless the credit note is dated in a future period. In this case, the transaction is posted when the period is opened.

  • The customer account balance is updated.
  • The transaction is posted to the following nominal accounts:
Nominal Account Debit Credit
Sales Account Net value
Tax Output VAT
Debtors Control Account Gross value

Sage is providing this article for organisations to use for general guidance. Sage works hard to ensure the information is correct at the time of publication and strives to keep all supplied information up-to-date and accurate, but makes no representations or warranties of any kind—express or implied—about the ongoing accuracy, reliability, suitability, or completeness of the information provided.

The information contained within this article is not intended to be a substitute for professional advice. Sage assumes no responsibility for any action taken on the basis of the article. Any reliance you place on the information contained within the article is at your own risk. In using the article, you agree that Sage is not liable for any loss or damage whatsoever, including without limitation, any direct, indirect, consequential or incidental loss or damage, arising out of, or in connection with, the use of this information.

See also

Dealing with sales

Contra entries (offset sales debt)

Enter customer refunds and other payments

Allocate customer transactions

Customer enquiry

Enter customer opening balances