How to Create Credit Note from Purchase Order | Latner Software Documentation

A supplier credit note records money a supplier owes back to you on goods or charges you have already been invoiced for, so a damaged pump, a double-charged freight line or a wrong price on a purchase order does not sit in your payables as a cost you never agreed to.

Overview

Suppliers get it wrong sometimes. In Latner the credit for a purchase order is always raised against the supplier invoice that billed it, so you start on the order, follow it to its invoice, and credit from there.

Create Credit Note from Invoice copies every line off the invoice, keeping the quantity, unit cost and tax type, so a full credit needs no typing.
You can change or delete those lines while the credit note is still Open, which is how you raise a partial credit.
Completing the credit note makes the credit available and pushes it to your active accounting integrations.
Allocate Credit then applies it to any completed invoice for the same supplier, which is what actually reduces what you owe.
The purchase order itself is not touched. Its status stays Invoiced and its Qty Invoiced figures are not reduced.

Before You Begin

You need the right permissions and an invoice that is ready to be credited.

Requirement	Where to Find It
Create Supplier Credit Note permission	Security › Configuration › Permission Groups › [group] › Suppliers › Option
Create Supplier Credit Note Detail and Edit Supplier Credit Note Detail permissions, if you need to add or change lines	Security › Configuration › Permission Groups › [group] › Suppliers › Option
Create Supplier Credit Note Allocation permission, to apply the credit to an invoice	Security › Configuration › Permission Groups › [group] › Suppliers › Option
A supplier invoice raised from the purchase order, in status Completed or Paid	The purchase order's Supplier Invoices tab, or Suppliers › Supplier Invoices

The Suppliers Option permissions, filtered on "Credit Note". Raising, editing and allocating a credit note are separate permissions

These permissions are checked against the branch on the credit note, so someone who can credit invoices in one branch will not necessarily be able to in another.

Creating the Credit Note

Step 1 - Open the purchase order and find its invoice

Go to Financials › Purchase Orders and open the order you need to credit, then open the Supplier Invoices tab. Every invoice raised against the order is listed there with its status and total. Note the invoice number you want to credit.

The purchase order's Supplier Invoices tab. An order can be billed by more than one invoice, so credit the one that carries the charge you are disputing

Step 2 - Open the invoice and choose Create Credit Note from Invoice

Click through to the invoice, then choose Options › Create Credit Note from Invoice. The option stays greyed out until the invoice is Completed or Paid, so an invoice that is still Open, Approved or Disputed has to be dealt with first.

The invoice Options menu. Financial Details on the left shows the purchase order the invoice was raised from

Step 3 - Check the credit note details

Latner fills the dialog in from the invoice. Check the two fields you can change, then click Save.

Supplier, Supplier Site, Branch and Source - carried across from the invoice and locked.
Supplier Contact - defaults to the accounts contact on the invoice. Change it if someone else at the supplier issued the credit.
Reference Number - prefilled as CREDIT- followed by the invoice's reference. Replace it with the supplier's own credit note number if you have it.
Credit Note for Supplier Invoice - the invoice being credited, locked.

The Create Supplier Credit Note dialog. Only the contact and the reference number can be edited when the credit note comes from an invoice

Step 4 - Review the credited lines

Saving opens the new credit note on the Details tab with a copy of every line from the invoice, at the same quantity, unit cost and tax type. The credit note starts in status Open, and Total Credit matches the invoice total.

The new credit note. The lines are copies rather than links, which is why the Purchase Order column stays empty

Step 5 - Adjust the lines for a partial credit

If the supplier is only crediting part of the invoice, change the lines before you complete the credit note. Double-click a line to open it and edit the Quantity or Unit Cost, or delete the lines you are not crediting. You can also use Options › Add Details to add a line the invoice never carried. Lines can only be changed while the credit note is Open.

Editing a credited line. Reducing the quantity credits part of a line, and the sub total recalculates on save

Step 6 - Complete the credit note

Choose Options › Complete Credit Note. The status moves to Completed, the completed date and user are stamped on it, and the credit note is pushed to any active accounting integration. A credit note with no lines cannot be completed.

The completed credit note. Remaining Credit is the amount still available to allocate

Step 7 - Allocate the credit to an invoice

A completed credit note does not reduce anything on its own. Choose Options › Allocate Credit, pick the invoice to apply it to, and enter the amount.

Invoice - only Completed invoices for the same supplier are offered. The picker shows each invoice's date, purchase order and outstanding balance.
Outstanding and Available Credit - the invoice balance and the credit still unused, both read only.
Credit Allocation - the amount to apply. It cannot be more than either balance.
New Balance and Leftover Credit - what the invoice and the credit note will be left with, updating as you type.
Credit Allocation Notes - optional.

Allocating the full credit. Leaving an amount unallocated keeps the balance on the credit note for a later invoice

After Creation

The credit note gets its own number and appears in Suppliers › Supplier Invoices with a Type of Credit Note.
Each allocation is listed on the credit note's Credit Allocations tab and on the invoice's Credit Adjustment tab.
When the whole credit has been allocated, the credit note moves to Paid and Remaining Credit falls to $0.00. If the allocation clears the invoice as well, the invoice moves to Paid.
Sync results are on the Integration Syncs tab, and Options › Sync Credit Note and Sync Allocations will push them again if an integration was down.

The credited invoice, now Paid, with the allocation recorded on its Credit Adjustment tab

A credit note never changes the purchase order. The order stays Invoiced, its Qty Invoiced is not reduced, and cancelling the credit note later will not put those quantities back either. If the goods are going back to the supplier and will be re-ordered or re-invoiced, reverse the receipt on the purchase order rather than relying on the credit note to unwind it.

FAQs

Can I raise a credit note straight from the purchase order screen?

No. The purchase order's Options menu has no credit note action. Open the order's Supplier Invoices tab, click through to the invoice that carries the charge, and raise the credit note from there.

The Source dropdown offers Purchase Order. Should I use it?

Not for this. If you start a credit note from Suppliers › Supplier Invoices › Options › Create Supplier Credit Note and set Source to Purchase Order, the credit note is only tagged with that source. No purchase order is linked and no lines are brought across, so you get an empty credit note with a $0.00 total. Start from the invoice instead.

Create Credit Note from Invoice is greyed out. Why?

The invoice is not Completed or Paid. An Open invoice should be completed first, a Disputed one approved or reopened, and a Cancelled invoice cannot be credited at all.

Why doesn't the credit note appear on the purchase order's Supplier Invoices tab?

That tab lists invoices whose lines are linked back to purchase order lines. Credit note lines are deliberately not linked to the order, so they never show there. Find the credit note in Suppliers › Supplier Invoices, or from the credited invoice's Credit Adjustment tab.

Saving fails with a message that the reference number already exists.

Reference numbers have to be unique per supplier across invoices and credit notes that are not cancelled. Change the Reference Number, for example by adding the invoice number to it.

Can I allocate the credit to a different invoice from the one I credited?

Yes. The allocation is a separate step, so a credit note raised against one invoice can be applied to any Completed invoice for the same supplier. It cannot be applied across suppliers, and an invoice that is already Paid has nothing left to credit.

The supplier only credited part of the invoice. What do I change?

Edit the lines while the credit note is still Open, at step 5. Reduce a quantity or unit cost to credit part of a line, and delete lines that are not being credited. Once the credit note is completed the lines are fixed.

Watch the Demo

Prefer to watch it? Step through the same flow here.