# Credit Notes System

Professional Returns & Refunds Management

## Overview

The Credit Note System provides a comprehensive solution for handling customer returns and refunds in accordance with proper accounting practices. Credit notes are the standard business documents for processing returns, providing formal documentation for both refunds and credit adjustments.

## Key Features

#### Professional Documents

- Auto-generated credit note numbers (CN202412XXXX)
- Professional PDF documents with branding
- HTML versions for web display and email
- Terms and conditions included

#### Multiple Refund Methods

- Cash Refunds: Immediate payment
- Bank Transfers: For card/bank returns
- Credit Adjustments: Account balance credits
- Store Credit: Future purchase credits

#### Complete Audit Trail

- Full transaction documentation
- User attribution (created by, approved by)
- Timestamps for all status changes
- Links to invoices and accounting entries

#### Inventory Integration

- Automatic inventory adjustments
- Condition-based handling (good/damaged)
- Serial number tracking
- Write-offs for damaged items

## Business Workflow

#### Customer Return Process

1. Customer brings items back to store
2. Staff member creates credit note in system
3. Items are inspected and condition recorded
4. Return reasons are documented
5. Credit note is generated as draft

#### Approval Process

1. Manager reviews credit note details
2. Verifies return policy compliance
3. Approves credit note (creates accounting entries)
4. System updates inventory based on item conditions

#### Refund Processing

1. Determine refund method based on original payment
2. Enter customer banking details if needed
3. Process refund through appropriate channel
4. Generate final credit note document for customer

#### Documentation

1. Print credit note for customer signature
2. File copy for business records
3. Email copy to customer if requested
4. All transactions recorded in accounting system

## Return Reasons

Reason Code | Description
--- | ---
`faulty_product` | Manufacturing defects
`wrong_item` | Incorrect product sent
`damaged` | Shipping/handling damage
`customer_request` | Changed mind

Reason Code | Description
--- | ---
`duplicate_order` | Accidentally ordered twice
`quality_issue` | Doesn't meet expectations
`size_issue` | Wrong size
`other` | Other reasons (describe)

## Item Conditions

Sellable

- Unopened: Original packaging
- Good: Excellent condition
- Used: Shows use but functional

Action: Added back to inventory

Not Sellable

- Damaged: Physical damage
- Faulty: Defective/malfunctioning

Action: Written off as loss

###### Note

Condition assessment affects inventory handling and accounting treatment. Damaged items create expense entries, while sellable items return to stock.

## Accounting Integration

##### IFRS Compliant

- Proper double-entry bookkeeping for all transactions
- Sales returns accounting entries
- VAT reversal handling
- Integration with general ledger

### Typical Accounting Entries

When Credit Note is Approved: Debit: Sales Returns Account P 1,000.00 Debit: VAT on Returns Account P 140.00 Credit: Accounts Receivable P 1,140.00 When Refund is Processed (Cash): Debit: Accounts Receivable P 1,140.00 Credit: Cash Account P 1,140.00 For Damaged Items (Write-off): Debit: Loss on Damaged Goods P 500.00 Credit: Inventory Account P 500.00

## API Endpoints

Method | Endpoint | Description
--- | --- | ---
POST | `/api/v1/credit-notes/` | Create new credit note
GET | `/api/v1/credit-notes/{id}` | Get credit note details
POST | `/api/v1/credit-notes/{id}/approve` | Approve credit note
POST | `/api/v1/credit-notes/{id}/process-refund` | Process refund payment
GET | `/api/v1/credit-notes/` | List credit notes with filters
GET | `/api/v1/credit-notes/pending-refunds` | Get pending refunds