Is a refund note and credit note both required for every customer refund?

Overview:

In business operations, customer refunds can occur due to deposit cancellations, damaged

goods, or other reasons. The accounting treatment and e-Invoice submission requirement

depend on the nature of the transaction. This article explains three common refund scenarios

and whether an e-Invoice or Credit Note is needed.

By understanding these scenarios, users can correctly record the transactions in the system and ensure compliance with e-Invoice regulations.

Scenario:

Scenario 1: Deposit Received, Then Refund

Use Case: Customer pays deposit but later cancels before any sales invoice is issued.
 

Transactions:

Receive Deposit:

Dr Bank
   Cr Customer

Refund to Customer:

Dr Customer
     Cr Bank 

• e-Invoice Requirement: ❌ Not required (No sales invoice involved)

Scenario 2: Full Payment Made, Item need to returned & Request Refund

Use Case: Customer purchased and paid, but returns items due to damage or cancellation.
 

Transactions:

Create Sales Credit Note:

Dr Sales
    Cr Customer
 

Customer Refund:

Dr Customer
    Cr Bank 

• e-Invoice Requirement: ✅ Sales Credit Note must be submitted
  (If Sales Invoice is submitted e-Invoice)

• e-Invoice Requirement: ❌ Not required for Customer Refund 

Scenario 3: Cash Sales Refund (For Cash Sales Submitted as Individual e-Invoice)

 Use Case 3.1 If the customer request refund with Stock Return 

 Use Case 3.2 Cash Sales Customer request refund without Stock Return
 

Transaction

Cash Sales:

Dr Bank
   Cr Sales
 

Customer Refund:

Dr Sales
   Cr Bank 

• e-Invoice Requirement:  If the Cash Sales is not an e-Invoice, ❌ Not required for Customer Refund

• e-Invoice Requirement:  if the Cash Sales Submit for e-Invoice,
  ✅ Refund must be submitted via e-Invoice
  
    

Currently QNE Optimum does not support Cash Sales Refund 

How to handle scenario - Cash Sales Customer request refund with / without  Stock Return? 

Solution:
1. Create a miscellaneous service item (Applicable for only Refund without stock return)

2. Create Sales Credit Notes – select MISC item / Stock item – Submit e-Invoice 

3. Create Customer Refund and knockoff with the CN (No need submit e-Invoice)
  

Summary:
 Submit e-Invoice from the Sales CN instead of Customer Refund 

 1. Create a service item named ‘MISCELLANEOUS’ or ‘MISC’ 

2. Create Sales Credit Notes
Select the original Cash Sales Customer Code. Update customer e-invoice require fields    

 3. Select the MISC item > update the refund amount > ensure the sales account is posted correctly 

4. Submit e-Invoice in Sales Credit Notes. 

 5. Proceed Customer Refund > Then knockoff the CN