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Cancel an Invoice & Credit Notes

This guide covers two scenarios: canceling a draft invoice that was never finalized, and canceling a finalized invoice by creating a credit note. The right approach depends on the current status of your invoice.

When to Cancel an Invoice​

Common reasons to cancel an invoice:

  • The invoice was sent to the wrong customer
  • Incorrect amounts, VAT rates, or line items
  • The underlying transaction was canceled or reversed
  • Duplicate invoice was created by mistake

The cancellation process differs depending on whether the invoice has been finalized.

Scenario A — Cancel a Draft Invoice​

Draft invoices have not yet been assigned a final invoice number and are not legally binding. You can cancel them directly.

  1. Open the invoice from the invoice list
  2. Click Cancel Invoice
  3. Confirm the cancellation in the dialog

The invoice status changes to Canceled. No credit note is created because the invoice was never finalized.

tip

Since draft invoices have no legal standing, canceling them is straightforward and does not affect your numbering sequence.

Scenario B — Cancel a Finalized Invoice​

Finalized invoices — those with status Open, Sent, or Paid — have been assigned an invoice number and are legally binding documents. They cannot simply be deleted. Instead, docs101 creates a credit note that formally reverses the original invoice.

Step-by-Step​

  1. Open the finalized invoice from the invoice list
  2. Click Create Credit Note
  3. Review the confirmation dialog — it shows the original invoice number and total amount
  4. Confirm to create the credit note

What Happens Next​

  • A new credit note is created as a Draft with all positions from the original invoice, but with negative amounts
  • The original invoice status changes to Canceled
  • The original invoice displays a link to the credit note
  • The credit note displays a reference to the original invoice number
warning

Canceling a finalized invoice is irreversible. Once the credit note is created, the original invoice cannot be restored to its previous status.

Finalize and Send the Credit Note​

The newly created credit note starts as a draft. You finalize and send it the same way as a regular invoice:

  1. Open the credit note from the invoice list
  2. Review the credit note — verify that all positions, amounts, and the reference to the original invoice are correct
  3. Click Finalize to assign a credit note number and generate the PDF
  4. Once finalized, click Send Invoice to deliver the credit note via email

The credit note PDF includes a reference to the original invoice number, negative line item amounts, and a negative total — making it clear that this document reverses the original invoice.

ZUGFeRD Compliance

Credit notes are fully ZUGFeRD-compliant. They use document type code 381 (Credit Note) per UNTDID 1001 and include the Preceding Invoice Reference (BG-3) linking back to the original invoice. The embedded XML is validated by the KOSiT Validator just like regular invoices.

Good to Know​

No Impact on Invoice Limits

Credit notes do not count against your monthly invoice limit. Whether you are on the Free or Pro plan, creating credit notes does not reduce your available invoice quota.

  • Separate number sequence — Credit notes use their own numbering sequence with a configurable prefix (default: SR). See Invoice, Customer & Credit Note Numbering for configuration details.
  • One cancellation per invoice — Each invoice can only be canceled once. If a credit note already exists for an invoice, the Create Credit Note button is no longer available.
  • Credit notes cannot be canceled — A credit note is a final corrective document. You cannot create a credit note for another credit note.
  • Full cancellation only — docs101 creates a full cancellation that reverses all positions 1:1. Partial cancellations are not supported.