Credit Note vs. Sales Return: Key Differences and Accounting Examples

A sales return occurs when a customer sends previously purchased goods back to the seller. A credit note is a document issued to reduce a previous invoice or the amount owed by the customer. A sales return may therefore require a credit note, but credit notes can also correct prices or grant allowances without any goods being returned.

For example, returning goods worth 500 may require a credit note and an inventory adjustment. A price reduction of 100 without a return generally requires no stock movement. Try Cash Cloud for free to explore invoicing and returns management tools.