Correcting a Credit Note Issued by Mistake on a Sales Invoice
In accounts with e-invoicing for the Zakat, Tax and Customs Authority (ZATCA) enabled, an invoice or note can’t be edited or deleted after it is issued. So if you issued a credit note by mistake (with a wrong amount or without tax), the correction is made by issuing corrective documents that are sent to ZATCA, not by a journal entry. This guide explains the correct method step by step, and its effect on e-invoicing, the tax declaration and the accounts.
Contents
Example case
- E-invoice (tax invoice) no. 000007 for 230 SAR (200 + 30 tax).
- E-credit note no. 000001 was issued by mistake for 200 SAR without tax (the tax wasn’t chosen on the item), so it was sent to ZATCA with an amount of 200 and zero tax.
- Required: cancel the invoice in full (230 including tax) without duplication.
Why a reverse journal entry doesn’t work
You can copy the credit note’s journal entry as a Reverse Journal Entry, but it doesn’t solve the problem:
- A manual journal entry isn’t sent to ZATCA, so the wrong note stays recorded there as it is.
- The credit note still appears in the tax declaration among the credit notes.
- The note stays linked to the invoice and counted in the refund status and the client balance.
- The books no longer match the documents issued to ZATCA.
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Rule: In e-invoicing, correct a document with another document (a debit note, a credit note or a refund receipt), not with a journal entry.
If the wrong note is a draft
If the credit note was saved as a Draft and not issued, edit it and add the 15% tax to the item (or delete it), then issue it. Only drafts can be edited or deleted while e-invoicing is enabled.
If the wrong note is issued: correction steps
Step 1: Enable sales debit notes
Open Sales Settings › Invoicing Settings › Payments & Credits, turn on Debit Note, and save. You also need the Add New Debit Note To All Clients or Add New Debit Note To His Clients permission.
Step 2: Issue a debit note that cancels the effect of the wrong credit note
- Open the original invoice no. 000007 from Invoices.
- Click Create Debit Note; the note is created linked to the original invoice (ZATCA requires this link).
- Add one line: in the description, write for example “Correction of credit note no. 000001 issued without tax”, set the unit price to 200, and leave the tax empty, exactly like the wrong note.
- Save the debit note.
- From the debit note page, click Send To ZATCA; the debit note isn’t sent to ZATCA automatically when it is added.
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Note: The debit note must match the wrong credit note in amount and tax (200 without tax), so it cancels its effect exactly.
Step 3: Issue a correct credit note for the full invoice
- Open the original invoice no. 000007, and choose Create Credit Note.
- Add the item for 200, and choose the 15% VAT tax, so the total is 230.
- Save the note (not as a draft); it is sent to ZATCA automatically.
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Note: If the message This item exceeds the amount that can be refunded appears, it’s because the wrong note has already used the item quantity. In that case, type the item as a free description without choosing the product from the list, with the same amount and tax.
If you’ll refund the amount to the client in cash, you can use a Refund Receipt for the same amount (230) instead of the credit note; it is also sent to ZATCA.
The result on e-invoicing, the declaration and the accounts
| Document | Amount | Tax |
|---|---|---|
| Invoice 000007 | +200 | +30 |
| Wrong credit note 000001 | −200 | 0 |
| Corrective debit note | +200 | 0 |
| Correct credit note | −200 | −30 |
| Net | 0 | 0 |
- At ZATCA: all the documents are sent and linked to the original invoice, and their net is zero.
- In the Tax Declaration: the invoice appears under Sales, the credit notes and the debit note appear under Edits, and the net tax due from this invoice is zero.
- In the accounts: the documents’ journal entries are created automatically, and their net effect on sales, tax and the client is zero, without any manual entry.
- Invoice status: shows Refunded.
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Note: After you save the debit note, it may be paid automatically from the client credit created by the wrong credit note if Auto-Pay Invoices Using Client Credit is enabled. Review the client balance and the documents’ payments after the correction.
Other correction cases
| Case | Correction |
|---|---|
| An issued invoice with an amount higher than the correct one | A credit note for the difference (with tax). |
| An issued invoice with an amount lower than the correct one | A debit note for the difference (with tax). |
| An invoice issued entirely by mistake | A credit note or a refund receipt for its full amount. |
| A credit note issued by mistake | A debit note on the original invoice with the same amount and tax, then the correct note if needed. |
| A document that is still a draft | Edit or delete it directly. |
FAQs
Is there a sales debit note in the system?
Yes, after you turn on Debit Note in Invoicing Settings. It is created from the original invoice and sent to ZATCA.
Can I delete the wrong credit note?
No. After it is issued with e-invoicing enabled, it can’t be edited or deleted; it is corrected with a debit note.
Is a reverse journal entry enough to correct the wrong note?
No. The entry changes the accounts only; it isn’t sent to ZATCA and doesn’t remove the note from the tax declaration.
I issued the debit note and it doesn’t appear on the ZATCA platform?
Click Send To ZATCA from the debit note page; it isn’t sent automatically when it is added.
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Warning: We recommend reviewing with your accountant or tax advisor before issuing corrective documents, to make sure they meet ZATCA requirements for your case.