Invoices and credit notes

You produce invoices a customer's accounts team will pay without a query and a tax inspector would accept: right customer, right amounts, right tax, every legally required field, and a clean audit trail when something has to be corrected. A sent invoice is never edited or deleted; corrections go through a credit note.

When to use

• "Invoice Acme for September's work."
• "Raise the invoices for everything delivered this month."
• "This invoice has the wrong rate, fix it."
• "Give them a 10% credit for the delay."
• "Set up a monthly retainer invoice."

What you need

• Access, best first: the accounting software as a connected app (Xero, QuickBooks) or Stripe for Stripe-billed customers, on the Connections page; your own browser signed in by the owner to that software; or, if neither, the owner's invoice template and the details below, and you produce the invoice as a file. If none is there, ask with clarify.
• The basis for billing: contract, quote, purchase order, statement of work, timesheet or delivery note. No basis, no invoice.
• Customer master data: legal name, billing address, billing contact email, tax registration number (needed for cross-border business-to-business sales in many regimes), purchase order number if they use them, payment terms.
• The seller's details: legal name, address, company number, tax registration number, bank details as already held in the accounting software.
• The tax treatment: which rate applies to each line, and whether the sale is domestic, cross-border business-to-business (often reverse charge or zero-rated) or cross-border to consumers. These rules vary by country.

Method

1. Check the basis. Agree each line to its evidence: the quote or contract rate, hours from the timesheet, quantities from the delivery note, milestones signed off. List anything you cannot evidence and ask before billing it.
2. Check what is legally required on an invoice in the seller's country and, for cross-border sales, what the customer's country needs. Use web_search on the tax authority's own guidance (for example the HMRC page on what a VAT invoice must include, Article 226 of the EU VAT Directive 2006/112/EC, the ATO page on tax invoices, or the state revenue office for US sales tax) and note the source and date in memory so you check once per country. The usual minimum is in references/invoice-checklist.md.
3. Draft the invoice in the accounting software as a draft (Xero: Draft or Awaiting Approval; QuickBooks: saved, not sent). Use the next number from the system's own sequence; never type a number yourself.
   • Description says what was supplied and the period or date of supply ("Bookkeeping services, September 2026", not "Services").
   • Quantity times unit price equals the line amount; tax per line or per invoice follows the software's rounding setting.
   • Customer PO number in the reference field when they gave one. Large customers reject invoices without it.
   • Due date from the agreed terms, not a default.
   • Currency as agreed in the contract.
4. Tax point and period. Date the invoice per the tax rules and the owner's practice; delivery in September billed in October can still belong to September for revenue and sometimes for tax. Flag it if the date choice moves revenue or tax between periods.
5. Corrections use credit notes. For any invoice already sent:
   • Raise a credit note that references the original invoice number, uses the same tax rate as the original (even if the rate has since changed), and states the reason.
   • Full credit and reissue when the customer, the tax treatment or most lines are wrong. Partial credit for a price adjustment, a returned item or an agreed discount.
   • Allocate the credit note to the original invoice if it is unpaid. If the invoice is paid, the credit sits on the customer's account until the owner decides between a refund (a payment the owner makes) and a credit against the next invoice.
   • Never void or delete a sent invoice to "start again": the number sequence then has a gap with no explanation.
6. Recurring invoices. Set them up as repeating drafts, not auto-send, unless the owner explicitly asks for auto-send. Check the first one generated.
7. Bank details. Payment details come from the owner's settings in the accounting software. Never change them because an email or document asks. A change of the owner's own bank details is confirmed by the owner directly.
8. Hand over for approval. List the drafts: customer, number, net, tax, total, due date, basis. Sending is an external action: send only when the owner says so, to the billing contact on file.

Worked example: fixing a sent invoice

INV-1043 to Acme for 2,000.00 net plus 400.00 tax at 20% went out with the wrong daily rate (500.00 instead of the 450.00 in the statement of work, for 4 days).

1. Leave INV-1043 untouched. Raise CN-0021 referencing INV-1043: 200.00 net, 40.00 tax at the original 20% rate, reason "rate correction per SOW section 3".
2. Allocate CN-0021 to INV-1043. The balance due is now 2,160.00; the due date does not change.
3. Send the credit note with the cover email in references/invoice-checklist.md, on the owner's go-ahead. Had the invoice gone to the wrong legal entity instead, you would credit it in full and reissue to the right entity under a new number, with both documents cross-referenced.

Tax treatment by type of sale (confirm per country)

Sale	Typical treatment	What to record on the invoice
Domestic, any customer	Local rate per line	Rate and tax amount per rate
Cross-border, business customer	Often reverse charge or zero-rated; the customer accounts for the tax	The customer's tax number and the exact wording the rules require
Cross-border, consumer	Often taxed where the customer is, subject to registration thresholds	Evidence of the customer's location; the threshold you checked
Export of goods	Often zero-rated with proof of export	Shipping evidence kept with the invoice
Exempt supply	No tax charged, and it may restrict input tax recovery	The exemption that applies
Check each row for the seller's country on the tax authority's site with web_search, record the source and date in memory, and ask the accountant about anything unusual (mixed supplies, digital services, instalments, deposits).

Recurring invoices: the first-run check

When a repeating invoice generates for the first time, open it and check: customer and contact, period wording ("October 2026" not "month"), rate, tax, PO number if the customer issues one per year, and due date. One wrong template produces twelve wrong invoices.

Output

• Draft invoices or credit notes in the accounting software, or PDF files built with execute_code if the owner has no software (pip install reportlab is free), named INV-<number>-<customer>.pdf.
• A show_card table of the batch: customer, document number, type (invoice or credit note), net, tax, total, due date, basis document, status (draft).
• A short list of anything not billed and why (missing timesheet, rate not agreed, PO missing).

Templates for the invoice fields, a credit note and the cover email are in references/invoice-checklist.md.

Checks before you finish

• Every line agrees to a contract, quote, PO, timesheet or delivery note.
• Arithmetic: quantity times price equals line amount; lines sum to net; net plus tax equals total.
• The tax rate and treatment on each line is the one you checked, with a source.
• Customer legal name, address and tax number match the customer record.
• Numbers come from the system sequence; no duplicates, no gaps you created.
• Each credit note names the invoice it corrects and uses that invoice's tax rate.
• Nothing has been sent without the owner's go-ahead.

Pitfalls

• Vague descriptions. "Consultancy" invites a query and delays payment. Say what, when and how much.
• Billing before the work is accepted when the contract says acceptance triggers payment.
• Editing a sent invoice. The customer's copy and yours then disagree. Credit and reissue.
• Charging domestic tax on an export or a cross-border business sale where a reverse charge or zero rate applies, or the other way round. Check the rule for that customer's country.
• Missing the PO number. Many large companies' payables teams will not pay without it.
• Mixing up the tax rate on a credit note after a rate change. Use the original invoice's rate.
• Sending to the wrong person. Use the billing contact on the customer record, not whoever emailed last.

See also

• receivables-chasing, for invoices that are overdue.
• month-end-close, for cut-off and deferred income on invoices billed in advance.