Correcting an invoice: how to issue a credit note
Introduction
An invoice sent with an incorrect amount, an item billed twice, or a customer returning goods: these situations happen more often than you might think. In Switzerland, you cannot simply modify or delete an invoice that has already been issued. The law requires strict traceability of all accounting documents, particularly for VAT purposes.
The solution? Issue a credit note. This document cancels all or part of an original invoice and allows you to correct the error whilst complying with legal obligations. When used incorrectly, a credit note can create accounting and tax problems. When properly mastered, it becomes a simple and effective tool for maintaining compliant invoicing.
In this practical guide, you'll discover when to issue a credit note, what information is mandatory in Switzerland, how to create one step by step, and how to handle VAT correctly. We'll also show you a concrete example and the mistakes to avoid so that your corrections are flawless.
📌 Summary (TL;DR)
A credit note allows you to legally cancel or correct an invoice that has already been issued, without modifying it directly. In Switzerland, it must include specific mandatory information and comply with VAT rules. The process involves identifying the relevant invoice, determining the amount to be credited, creating the document with the required information, then sending and recording it correctly.
📚 Table of contents
What is a credit note?
A credit note is an official accounting document that cancels all or part of an invoice that has already been issued. It works like a negative invoice: instead of requesting payment, it credits the customer with an amount.
Unlike a simple deletion or modification, a credit note respects accounting traceability. The original invoice remains intact in your archives, and the credit note officially corrects it.
Common use cases include: incorrect amount or quantity, returned product, cancelled service, discount granted after the fact, or invoice issued in duplicate. It's the legal method for correcting an invoice that has already been sent.
When should you issue a credit note?
You must issue a credit note as soon as an invoice has been sent and recorded. You cannot simply delete or modify it: accounting traceability forbids it.
Common situations requiring a credit note:
- Invoicing error (incorrect price, wrong quantity, inappropriate VAT rate)
- Goods returned by the customer
- Cancellation of a service or provision
- Commercial discount granted after the invoice was issued
- Invoice issued in duplicate by mistake
To avoid these situations, consult our guide on common invoicing mistakes.
Mandatory information on a credit note in Switzerland
A credit note must meet the same legal requirements as a standard invoice. Here are the mandatory elements:
- Explicit mention "Credit note"
- Unique and sequential number
- Issue date of the credit note
- Precise reference to the original invoice (number and date)
- Complete supplier information (name, address, VAT number if registered)
- Customer information
- Details of credited amounts (amount excluding VAT and VAT)
- Total amount of the credit note
These rules guarantee tax and accounting compliance. For more details, consult our article on mandatory legal information.
How to create a credit note: practical steps
Issuing a credit note follows a structured four-step process. Each step guarantees legal compliance and accounting traceability.
Whether you use invoicing software like BePaid or a manual system, these steps remain identical. Automation simply streamlines the process and reduces the risk of error.
Follow these steps to create your credit note correctly.
Step 1: Identify the invoice to be corrected
Start by finding the original invoice in your archives. Note its exact number, issue date and total amount.
Identify precisely the element to be corrected: is it the total amount, a specific line, a quantity error or an incorrect VAT rate?
This precise identification determines the amount of the credit note to be issued and avoids any subsequent confusion in your accounting.
Step 2: Determine the amount to be credited
Calculate the exact amount of the credit note: full credit (complete cancellation) or partial credit (correction of one line).
Crucial point: the VAT on the credit note must be credited at the same rate as the original invoice. If the initial invoice was at 8.1%, the credit note must apply 8.1%.
Example: Invoice of 500 CHF excluding VAT + 40.50 CHF VAT (8.1%) = 540.50 CHF including VAT. For a full credit, the credit note will be -540.50 CHF including VAT (including -40.50 CHF VAT).
Step 3: Create the credit note document
Use your invoicing software to generate the credit note automatically. BePaid creates compliant credit notes in a few clicks with automatic numbering.
If you're working manually, assign a unique number in your invoicing sequence. Some businesses use dedicated numbering (e.g. CN-001), others integrate credit notes into the general numbering.
Clearly indicate the reference to the original invoice ("Credit note relating to invoice No. XXX dated DD/MM/YYYY"). Include all customer and supplier information from the initial invoice.
Step 4: Send and record
Send the credit note to your customer by email or post, as you would for a standard invoice.
Record the credit note in your accounts. It reduces your turnover and the VAT due for the relevant period.
Important: adjust your VAT return. The amount of VAT invoiced decreases by the amount credited. Keep the original invoice AND the credit note in your archives for a minimum of 10 years.
This traceability is essential in the event of a tax audit.
Credit notes and VAT: what you need to know
A credit note in Switzerland has a direct impact on your VAT return. It reduces your taxable turnover and therefore the VAT due to the Federal Tax Administration.
Fundamental rule: the VAT on the credit note must be credited at the same rate as the original invoice. Invoice at 8.1% = credit note at 8.1%. Invoice at 3.8% (accommodation) = credit note at 3.8%. Invoice at 2.6% (essential goods) = credit note at 2.6%.
The credit note must be declared in the tax period in which it is issued, not that of the original invoice. If you issue a credit note in March for a January invoice, it appears in your March return.
For more information, consult our guide on VAT and invoicing in Switzerland.
Concrete example of a credit note
Here's a practical case of a complete invoice cancellation:
Original invoice No. 2024-045 dated 15 January 2024:
- Consulting service: 1000 CHF excluding VAT
- VAT 8.1%: 81 CHF
- Total including VAT: 1081 CHF
The customer cancels the service on 20 January.
Credit note No. 2024-046 dated 20 January 2024:
- Mention: "Credit note relating to invoice No. 2024-045 dated 15/01/2024"
- Consulting service: -1000 CHF excluding VAT
- VAT 8.1%: -81 CHF
- Total to be credited: -1081 CHF
The customer owes nothing. Your turnover and VAT due decrease by 1081 CHF and 81 CHF respectively.
Mistakes to avoid when issuing a credit note
Common mistakes can compromise your tax compliance:
- Deleting the original invoice: Never. The invoice remains in your archives, the credit note corrects it.
- Forgetting the reference: Always indicate the number and date of the original invoice.
- VAT error: Apply the same rate as the initial invoice, not the current rate if it has changed.
- No numbering: Each credit note requires a unique number in your sequence.
- Accounting oversight: Record the credit note in your accounts and adjust your VAT return.
- Insufficient retention: Keep both invoice AND credit note for a minimum of 10 years.
Software like BePaid automates these checks and drastically reduces the risk of error.
A credit note is an essential accounting document for correcting an erroneous invoice or cancelling a transaction. It allows you to rectify amount errors, cancel services not provided or manage customer returns whilst remaining compliant with Swiss legal obligations.
To issue a valid credit note, respect the mandatory information: reference to the original invoice, continuous numbering, details of credited amounts and VAT. Make sure never to modify an invoice that has already been issued directly and to properly document each correction to facilitate your accounting and tax returns.
With BePaid, create your invoices and credit notes compliant with Swiss standards in a few clicks. QR-invoices, VAT management, payment tracking: all the tools to simplify your invoicing from 20 CHF/month. Try it free with 10 invoices included.
