You might come to a situation where you have sent an invoice and spotted an error later. Or your customer requested a change. An Invoice should never be deleted. So, if a situation that requires the invoice to be canceled or improved, arises, issuing a credit note is usually enough. To cancel an invoice officially, and legally this Credit Note will be helpful.

You need to know for an invoice wherein the invoice process it is, and what information has mistakes. An Invoice will be legally canceled by using a credit note.

cancel an invoice

How to Create a Credit Note

Issuing a credit note will work for you in most situations to cancel an invoice. This credit note is a legal document used to ‘pay’ the invoice to avoid it becoming overdue.

How the credit note should work are that it shows the negative value of an invoice. So, to help you balance the amounts in your accounting, instead of showing $100, it will show the balance of -$100.

Also, you will have to continue with the unique number of invoices. So if the invoice 4 needs to be canceled, the credit note will be number 5. And the next invoice will be number 6.

Do you Need to Provide a Credit Note for a Proforma Invoice?

Proforma invoices are not official invoices, so it’s not necessary to file a credit note to cancel or change them. Only after you convert it to a full invoice, you’ll have to issue a credit note to change or cancel it.

cancel an invoice

Some legalities to Cancel an Invoice

You should know that there are some legal restriction involved when you want to cancel an invoice. An invoice should never be deleted, instead you should always issue a credit note.

Therefore, Deleting or canceling an invoice improperly can lead you in trouble. It may look like you’re hiding money from the tax authority, which will lead to an audit and fines.

Conclusion

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