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Cancel an Invoice & Credit Notes

This guide covers three scenarios: canceling a draft that was never finalized, canceling a finalized invoice that is still unpaid, and canceling an invoice the customer has already paid. 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 and whether it has been paid.

Scenario A — Cancel a Draft Invoice​

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

  1. Open the invoice from the invoice list
  2. Click Discard Draft
  3. Confirm 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: "Cancel invoice {number}? A credit note will be created and the original invoice will be marked as canceled."
  4. Confirm to create the credit note

If the invoice was already paid, the dialog adds a second line, for example: "This invoice was paid on {date}. After canceling, you must refund {amount} to the customer." See Refund a Paid Invoice.

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. A payment date that was already recorded stays on the invoice.
  • 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.

Unpaid vs. Paid Invoices​

What you have to do after creating the credit note depends on whether the customer had paid the original invoice.

Cancel an unpaid invoiceCancel a paid invoice
Original invoiceBecomes CanceledBecomes Canceled, payment date is kept
Credit noteDraft, Open, Sent. After that the process is complete.Draft, Open, Sent, Refunded
What you doNothing furtherPay the money back and click Mark as refunded (date, payment method, reference)
Refund dateNot applicableNot in the future, not before the original payment, may be before the credit note date
Customer emailNot applicableOptional refund confirmation (checkbox in the dialog or later via a button, can be sent again)
Dashboard and KPIsOriginal and credit note contribute nothing, so open amounts never turn negativeThe same, plus a pending refunds notice until the refund is recorded

For the background, see Credit Notes Explained.

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 Invoice to assign a credit note number and generate the PDF
  4. Once finalized, click Send via Email to deliver the credit note, or Mark as Sent if you delivered it another way

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.

Refund a Paid Invoice​

If the customer had already paid the canceled invoice, the credit note means you owe them money. docs101 does not move money. It documents the refund once you have paid it back, so the credit note is closed in your records.

  1. Finalize and send the credit note as described above. The credit note must have status Sent before you can record the refund.
  2. Pay the amount back to the customer outside docs101, for example by bank transfer.
  3. Open the credit note and click Mark as refunded.
  4. In the Record refund dialog, check or fill in:
    • Refund amount — The gross amount of the credit note, shown as a positive amount. The field is read-only.
    • Refund date — Required. Defaults to today.
    • Payment Method — Optional. If you leave it empty, docs101 records Bank Transfer.
    • Reference — Optional, for example the transfer reference.
  5. Click Confirm refund.

The credit note status changes to Refunded. The refund date appears on the credit note as Refunded on.

Rules for the Refund Date
  • The date cannot be in the future.
  • The date cannot be before the original payment date.
  • The date may be before the date of the credit note. This covers the case where you returned the money before you issued the paperwork.

Status Display​

The status stepper at the top of a credit note shows three steps — Draft, Open, Sent — when the original invoice was unpaid. When the original invoice was paid, a fourth step Refunded is added, and the credit note shows it from the start. A credit note that is Sent and still waiting for its refund keeps the Sent step active.

The canceled original invoice shows one of two notices:

  • While the refund is open: "This invoice was canceled. The refund to the customer is still outstanding."
  • After you recorded the refund: "This invoice was canceled. The refund was made on {date}."

In the invoice list, a refunded credit note carries the status Refunded. It is not counted as a payment received.

Refunds Are Full Refunds

docs101 records the refund of the full credit note amount. Partial refunds are not supported.

Notify the Customer​

After you record a refund, you can send your customer a confirmation by email. The email is optional and nothing is sent unless you ask for it.

Send It While Recording the Refund​

In the Record refund dialog, select Notify the customer about the refund by email. The checkbox is off by default. The recipient address is shown below it. When you click Confirm refund, docs101 records the refund and sends the email.

Send It Later​

On a refunded credit note, click Send refund confirmation. A dialog asks "Send refund confirmation to {email}?" and sends the email once you confirm. If a confirmation was already sent, the button is labeled Resend refund confirmation, and you can send it as often as you need.

After a send attempt, the left side of the action bar shows the result: "Refund confirmation sent to {email} on {date}" or "Refund confirmation could not be sent".

What the Email Contains​

  • Language: The language set on the customer (English or German).
  • Subject: "Refund for credit note {credit note number} (invoice {invoice number})", or in German "Erstattung zu Stornorechnung {credit note number} (Rechnung {invoice number})".
  • Body: The refunded amount, the refund date, and the credit note and invoice it refers to. If you entered a payment method or reference, they are listed as well.
  • Attachment: The credit note as a PDF. This also covers customers who never received the credit note because you marked it as sent without emailing it.
  • Footer: Your company details, like all customer emails. See Email Configuration.

Customers Without an Email Address​

If the customer has no email address, the checkbox and the Send refund confirmation button are disabled. In the dialog, the text "This customer has no email address on file." appears where the recipient would be shown. On the button, it appears as a tooltip. Add an address in the customer record to enable them.

A Failed Email Does Not Undo the Refund

The refund and the email are separate steps. If the email cannot be sent, the refund stays recorded. docs101 shows "Refund saved, email could not be sent". Use Send refund confirmation or Resend refund confirmation to try again.

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. The refund confirmation email does not use any credits either.

  • 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.
  • Full refund only — The refund covers the whole credit note amount.
  • No payment booking in the DATEV export — The DATEV export contains the invoice and the credit note, but no booking for the refund itself. Your tax advisor sees the refund through the bank statement. See DATEV Export.
  • Audit Log — Creating, sending, refunding, and notifying are recorded. See Audit Log.