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Understanding credit notes, invoice cancellations and reversals
Understanding credit notes, invoice cancellations and reversals

Behavior and accounting impact

Collaboratrice Virtuelle avatar
Written by Collaboratrice Virtuelle
Updated over 8 months ago

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The credit note

Credit notes are often used to reduce accounts receivable.

  • Original invoicing NOT affected

  • A new Credit Note transaction is created in the financial summary

    • It uses its own number

  • A new accounting transaction is created affecting the relevant general ledger accounts (according to the office's accounting integration accounts) depending on the invoice to which the credit note is applied.

    • Credit note on fees

    • Credit note on disbursements

    • Taxes

  • Transaction date can be user-defined

  • Work in progress is NOT reactivated in the matter.

  • A credit note document is generated in the same way as an invoice. It is automatically saved in the matter.


Cancelling an invoice

Cancellation is often used when an invoice has to be redone because it contains errors.

  • The original invoicing is affected.

  • It is completely cancelled and a -X is added to the transaction number

  • The accounting transaction linked to the invoice is still visible in the GL, but no longer has any accounting assignments (the entry is empty).

    • It also displays a -X and a cancellation note is added

  • This operation always affects the system on the original invoice date.

  • Work in progress IS reactivated in the matter and can be invoiced again.

  • No document is generated when an invoice is cancelled. The original invoice .pdf document is annotated with the same -X as the transactions.


Invoice reversal

Reversal is often used when an invoice has to be redone because it contains errors, but for reasons of accounting limitations cannot be cancelled directly.

  • The original invoice is NOT affected

  • A new negative invoice reversal transaction is created in the financial summary

    • It uses the same number as the original invoice with -R

  • A new equivalent accounting transaction is created, affecting the same general ledger accounts as the original invoice, but with the opposite accounting impact.

    • It also displays a -R

  • This operation is always performed on the current date

  • Work in progress IS reactivated in the matter and can be invoiced again.

  • No document is generated when an invoice is reversed. The original invoice .pdf document is annotated with the same -R as the transactions.


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