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Credit & Debit Notes

Credit notes and debit notes are adjustment documents that modify the financial effect of a previously issued invoice. They are a core part of ZATCA-compliant invoicing -- you cannot simply delete or edit an approved invoice. Instead, you issue a credit or debit note to make corrections.

Credit Notes​

A credit note reduces the amount a customer owes. Common reasons for issuing a credit note:

  • Full or partial refund -- the customer returned goods or cancelled a service.
  • Billing error -- the original invoice had incorrect pricing, quantities, or tax calculations.
  • Discount applied after the fact -- a negotiated discount that was not reflected on the original invoice.
  • Damaged goods -- items arrived damaged and the customer is being compensated.

Creating a Credit Note​

  1. Navigate to Sales > Invoices.
  2. Click Create Invoice and select Credit Note as the document type.
  3. Select the original invoice that this credit note adjusts. This is a required field.
  4. The customer is automatically populated from the original invoice.
  5. Add line items representing the amounts being credited. These can be:
    • The same items from the original invoice (for full reversal).
    • A subset of items (for partial refund).
    • Adjusted quantities or prices (for corrections).
  6. Enter a reason for the credit note.
  7. Save and submit for approval.
note

A credit note's total cannot exceed the total of the original invoice it references. If you need to credit more than the original invoice amount, you must create separate credit notes against different invoices.

Debit Notes​

A debit note increases the amount a customer owes. Common reasons for issuing a debit note:

  • Undercharging -- the original invoice had a lower price than agreed.
  • Additional services -- extra work was performed after the original invoice was issued.
  • Price adjustment -- contractual price escalation or surcharges.

Creating a Debit Note​

  1. Navigate to Sales > Invoices.
  2. Click Create Invoice and select Debit Note as the document type.
  3. Select the original invoice that this debit note adjusts.
  4. Add line items representing the additional amounts being charged.
  5. Enter a reason for the debit note.
  6. Save and submit for approval.

Both credit notes and debit notes maintain a reference to their original invoice. This linkage:

  • Is required by ZATCA for compliance.
  • Allows Shaari to track the net amount on any invoice (original amount minus credits plus debits).
  • Shows up in the original invoice's detail view as "Related Documents."
  • Carries over to analytics, so your revenue figures reflect the adjusted amounts.

Impact on Sales Analytics​

Credit and debit notes directly affect your sales analytics:

DocumentEffect on Revenue
Standard InvoiceIncreases revenue
Credit NoteDecreases revenue
Debit NoteIncreases revenue

When you view revenue reports, the figures reflect the net amounts after all credit and debit notes are applied. This gives you an accurate picture of actual revenue rather than gross invoiced amounts.

Credit notes also affect:

  • Customer spending analysis -- the customer's total purchases are adjusted.
  • Product performance -- refunded products show reduced sales volumes.
  • Payment tracking -- if a credit note is issued against a paid invoice, it may create a credit balance for the customer.

ZATCA Reporting for Credit & Debit Notes​

Credit and debit notes follow the same ZATCA submission process as standard invoices:

  • They are generated as UBL 2.1 XML documents with the appropriate document type code.
  • B2B credit/debit notes go through the clearance process.
  • B2C credit/debit notes go through the reporting process.
  • Each receives its own ZATCA-compliant QR code.

The ZATCA XML for credit and debit notes includes the reference to the original invoice (invoice number and issue date), which ZATCA uses to validate the adjustment.

caution

ZATCA requires that credit and debit notes reference a valid, previously cleared or reported invoice. You cannot issue a credit note against a draft or pending invoice.

Status Workflow​

Credit and debit notes follow the same status workflow as standard invoices:

DRAFT -- the note is being prepared and can be freely edited.

PENDING_APPROVAL -- submitted for review. Core fields are locked.

APPROVED -- reviewed and approved. Ready for ZATCA submission.

CLEARED / REPORTED -- successfully processed by ZATCA.

CANCELLED -- voided before ZATCA submission. Cannot be cancelled after clearance/reporting.

tip

When correcting an invoice, always issue a credit note for the full amount of the incorrect invoice, then create a new correct invoice. This leaves a clean audit trail and avoids partial adjustment confusion.