Credit notes

A credit note is a document that reduces or cancels the amount owed on an invoice. In Financica, credit notes are first-class records that appear alongside regular invoices in the Expenses and Revenue sections.

How credit notes work

Credit notes follow the same lifecycle as regular invoices -- they can be received, posted, voided, and deleted. The key difference is that a credit note represents a negative amount: money owed back to the buyer.

Credit notes can be:

• Inbound -- A credit note from your supplier, reducing what you owe them. Appears in Expenses.
• Outbound -- A credit note you issue to your customer, reducing what they owe you. Appears in Revenue.

Creating credit notes

Credit notes can enter Financica in several ways:

• Upload -- Upload a PDF or image of a credit note. The OCR engine extracts the data just like a regular invoice.
• UBL import -- Upload a UBL XML credit note for accurate structured data import.
• Peppol -- Receive credit notes electronically over the Peppol network. See Electronic invoicing.
• Stripe sync -- Credit notes from Stripe are imported automatically when your Stripe integration is connected.

Applying credit to an invoice

Once you have a credit note, you can apply it against one or more invoices to reduce their outstanding balance.

From the credit note detail page:

1. Find the Credit applications section.
2. Select the invoice you want to apply the credit to. Financica suggests candidate invoices that share the same direction, currency, and counterparty.
3. Enter the amount to apply (up to the remaining credit balance).
4. Confirm the application.

When credit is applied:

• A netting journal entry is created in your books that settles both documents.
• The credit note's remaining balance decreases by the applied amount.
• The target invoice's balance due decreases by the same amount.
• Both records' payment statuses update automatically (e.g. from "Unpaid" to "Partially paid" or "Paid").
• The settlement appears in the invoice's Linked transactions section, just like a bank payment would.

You can apply a credit note partially across multiple invoices, or apply the full amount to a single invoice.

Automatic credit applications

Some credit notes are applied automatically:

• Stripe -- When Stripe issues a credit note against an invoice, Financica links and applies it automatically during sync.
• UBL -- If an incoming UBL credit note references a specific invoice number, Financica matches and applies it automatically.

Posting and reconciliation

Credit notes need to be posted to appear in your financial reports, just like regular invoices. When a credit note is posted, it creates a journal entry with reversed amounts -- debiting the revenue or expense account and crediting the control account (Accounts Receivable or Payable).

Automatic posting

When a credit note is applied to an invoice during Stripe sync, Financica automatically posts both the credit note and the parent invoice to the books if neither has been posted yet. This means Stripe credit notes that fully settle an invoice will show as reconciled without manual intervention.

For manually uploaded or UBL-imported credit notes, you need to post the credit note yourself after applying it.

What posting creates

For an outbound credit note of 100 EUR applied against an invoice:

Leg	Account	Amount
Control	Accounts Receivable	+100 EUR (debit, reducing the receivable)
Category	Revenue account	-100 EUR (credit, reversing the revenue)

This is the mirror image of the original invoice's journal entry, effectively cancelling the revenue and the receivable.

What applying a credit note creates

When you apply a credit note to an invoice, Financica creates a netting journal entry -- a transaction that explicitly settles both documents in the ledger. This entry has two legs on the same Accounts Payable (or Receivable) account:

Leg	Account	Amount	Purpose
Invoice settlement	AP/AR	Debit (inbound) or Credit (outbound)	Reduces the invoice's outstanding payable/receivable
Credit note offset	AP/AR	Credit (inbound) or Debit (outbound)	Consumes the credit note's available balance

The two legs sum to zero, so the AP/AR account balance is unchanged at the aggregate level. What changes is the sub-ledger: both the invoice and credit note are now marked as settled, and this settlement is visible in the invoice's linked transactions.

Both documents must be posted before a credit note can be applied. If the credit note was imported from Stripe, both documents are posted automatically.

Reconciliation status

The reconciliation indicator on the invoice list reflects whether a journal entry exists:

• Reconciled (green) -- Invoice has been posted to the books.
• Unreconciled (red) -- Invoice has not been posted yet.

Both the credit note and the original invoice must be individually posted to show as reconciled.

Credit notes in reports

Posted credit notes appear in your income statement, balance sheet, and VAT returns just like regular invoices, but with reversed amounts. An outbound credit note reduces reported revenue; an inbound credit note reduces reported expenses.