What is a Credit Note?

A credit note — known in Danish as a kreditnota — is a document issued by a seller to a buyer that reduces or cancels a previously issued invoice. In accounting terms, it is a negative invoice: where an invoice records an amount the buyer owes the seller, a credit note records an amount the seller owes the buyer.

Credit notes are a legal document under Danish bookkeeping regulations and must meet the same formal requirements as a standard invoice, including date, CVR number, buyer and seller information, itemised description, and VAT.

When Is a Credit Note Issued?

The most common reasons a credit note is issued include:

• Returned goods — the buyer returns all or part of a delivery
• Overbilling — the original invoice contained a price or quantity error
• Agreed discount — a discount was negotiated after the invoice was issued
• Cancelled order — goods or services were cancelled before delivery was completed
• Quality complaints — goods were delivered but did not meet the agreed specification
• Partial delivery — only part of a shipment arrived, but the full amount was invoiced
• Subscription cancellation — a prepaid period is partially refunded

Credit Notes in the Finance Team: The AP Perspective

Most articles about credit notes focus on issuing them to customers. But for a finance or AP team at a mid-to-large company, the more operationally complex challenge is receiving credit notes from suppliers — and processing them correctly.

When a supplier issues a credit note against an invoice your company has already paid or booked, several things must happen:

1. Match against the original invoice — the credit note must be linked to the specific invoice it partially or fully cancels. Without this match, your accounts payable balance is wrong.
2. Correct the VAT — if you claimed input VAT on the original invoice, you must reverse that claim on the portion covered by the credit note. Failure to do so is a compliance error that Skattestyrelsen can challenge during an audit.
3. Post to the correct G/L account and cost centre — the credit note must hit the same expense account as the original invoice to keep period-end reporting accurate.
4. Approve before posting — especially for large credit notes, an internal approval step ensures the credit is legitimate before it reduces your liability.
5. Archive as a bookkeeping document — under the Danish Bookkeeping Act (Bogføringsloven), credit notes must be retained for five years as part of your audit trail.

When your company receives dozens or hundreds of supplier credit notes per month, doing this manually creates real risk: unmatched credit notes that distort your AP balance, missed VAT corrections, and closing delays while the finance team chases the original invoices.

VAT Correction: A Compliance Obligation That Is Often Missed

When a supplier sends you a credit note for DKK 10,000 + 25% VAT, you must reverse DKK 2,500 in previously claimed input VAT. This is not optional — it is a legal obligation under the Danish VAT Act (Momsloven § 52a).

In practice, this means:

• The VAT reduction must be reported in the same VAT period as the credit note (or the period it relates to, if different)
• The credit note must contain a VAT specification — a credit note without itemised VAT cannot be used as a VAT document
• If the original invoice and the credit note fall in different VAT periods, you may need to file a correction with Skattestyrelsen

Finance teams that process credit notes manually often miss these corrections — particularly when credit notes arrive without a clear reference to the original invoice.

Credit Notes in Expense Management

Credit notes also arise in the context of employee expenses. When an employee books a hotel, buys an airline ticket, or makes a company purchase that is later cancelled or refunded, the supplier typically issues a credit note (or a refund) against the original receipt or invoice.

This creates a reconciliation challenge: the original expense has been registered, approved, and possibly reimbursed. The credit note must now be matched back against that specific expense claim, and the employee's reimbursement may need to be adjusted.

Without a system that connects supplier credit notes to the original expense records, this reconciliation is done manually — searching through expense reports to find the matching entry, recalculating reimbursements, and correcting bookkeeping entries.

ERP Integration: How Automated Credit Note Processing Works

In a well-integrated finance setup, a supplier credit note received via e-mail or e-invoicing (OIOUBL/PEPPOL) is:

1. Automatically captured — via OCR scanning or direct e-invoice ingestion
2. Matched to the original invoice — using invoice number, supplier CVR, amount, or PO reference
3. Routed for approval — if above a threshold, the credit note goes to the relevant budget holder or AP manager
4. Posted automatically — to the correct G/L account, cost centre, and VAT code, in the correct period
5. Archived — as a bookkeeping document linked to the original invoice in your document trail

This process eliminates the manual matching step, reduces VAT correction errors, and ensures your AP balance reflects reality at any point in the month — not just after period-end cleanup.