Goodwill credit note template
Goodwill credit note template: make up for a late delivery or an inconvenience by crediting part of an invoice, line by line, with the complaint named.
Templates by industry
- Installation labour: 2 of 6 hours waived
- Delivery charge waived for the late arrival
- First-year service plan given free
Preparation guide
Example workflow
Identify the invoice and the reason
Example: for "Installation labour: 2 of 6 hours waived", find the original invoice, note its number and date, and record the reason: a return, a price reduction or a cancellation.
Credit the affected lines
Enter the quantity or amount credited for each affected line, down to "First-year service plan given free", so the tax on it is reversed in proportion.
Send and settle the credit
Send the credit note to the customer, then refund the amount or set it off against the next invoice, and keep both documents together.
Sometimes nothing is legally wrong with the work, yet the customer had a bad experience: the installer came five days late, a call was never returned, a delivery window was missed twice. A goodwill credit note makes up for it by reducing what the customer pays, on specific lines of the original invoice. Choosing lines rather than a round sum keeps the books tidy and shows the customer exactly what was waived and why.
Fields to prepare
- Deliverables and line items
- Installation labour: 2 of 6 hours waived, Delivery charge waived for the late arrival, First-year service plan given free: only the lines being reduced or cancelled, with the quantity or amount credited.
- Installation labour: 2 of 6 hours waived
- Credit part of a line, such as hours of labour, rather than inventing a discount line the original invoice never had.
- Delivery charge waived for the late arrival
- Waiving a delivery charge is a clear gesture when the complaint was about the delivery itself.
- First-year service plan given free
- A free service plan credits a line already billed; if the plan was never invoiced, offer it without a credit note.
- Original invoice
- Quote the number and date of the invoice being corrected, and the reason: a return, a price reduction or a cancellation.
- Settlement
- Say how the credit is settled: refunded to the customer or set off against the next invoice.
- Scope to agree
- Describe the inconvenience in neutral words, link the credit to the invoice and the lines it reduces, and say whether it settles the complaint.
Before sending
- Is “Installation labour: 2 of 6 hours waived” one of the lines being corrected, at the price on the original invoice?
- Is the quantity or amount credited for “Delivery charge waived for the late arrival” no more than was invoiced?
- Does the customer know why “First-year service plan given free” is credited: a return, a price change or a cancellation?
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- Credit only the affected lines, and reverse the tax on them at the rate the original invoice used.
- Give the credit note a number of its own rather than reusing or changing the original invoice number.
- Agree with the customer whether the credit is refunded or set off before you send it.
Worked example: making up for an installation five days late
The figures are an example, with an example tax rate of 8%. Invoice INV-2026-0931 billed six hours of installation at $75, a delivery charge of $90 and a first-year service plan at $140. The installer arrived five days late, and the business offers two hours of labour, the delivery and the service plan as goodwill.
- Labour: 2 of the 6 hours credited at $75.
- Delivery and plan: each credited in full.
- Notes: the complaint, the words “as a gesture of goodwill” and whether it settles the matter.
| Item | Credited / billed × unit price | Amount |
|---|---|---|
| Installation labour: 2 of 6 hours waived | 2 / 6 × $75.00 | $150.00 |
| Delivery charge waived for the late arrival | 1 / 1 × $90.00 | $90.00 |
| First-year service plan given free | 1 / 1 × $140.00 | $140.00 |
| Credit before tax | $380.00 | |
| Sales tax (8%) | $30.40 | |
| Credited | $410.40 | |
| Original invoice | $734.40 | |
| Remaining on the invoice | $324.00 | |
The credit is $380.00, with tax of $30.40, so $410.40 in all. The original invoice came to $734.40, and $324.00 remains payable for the rest of the installation.
Common mistakes on a goodwill credit note
- Crediting a round sum with no link to the invoice lines or the reason.
- Wording the note as an admission of a defect when the intent is goodwill.
- Giving goodwill twice for the same complaint, once as a credit and once as a discount.
- Forgetting to credit the tax that went with the waived lines.
- Not saying whether the credit is paid out or set against the next invoice.
What the document must show
These details make a credit note easier to approve and to file.
- A number of its own and the issue date
- The number and date of the original invoice
- The reason: a return, a price reduction or a cancellation
- The lines being credited, with quantity and amount
- The tax being reversed, and the total credit
- How it is settled: a refund, or set off against the next invoice
The sales tax depends on where the work is supplied, so set the rate that applies to your customer before sending.
Official rate reference: US government: state and local taxes
Frequently asked questions
Does a goodwill credit admit that we were at fault?
The wording matters. Describe the inconvenience, not a defect, and call the credit a gesture of goodwill. If the complaint might turn into a claim, take advice before you put anything in writing; this is not legal advice.
Should a goodwill credit reduce the tax?
If it reduces the price of the supply on the invoice, the tax is normally credited in proportion, as on any credit note and as this template does. A gift unconnected with an invoice is treated differently, so check with your adviser in that case.
Can the goodwill be a discount on the next order instead?
Yes. Then no credit note is needed now: put the discount on the next invoice and refer to the complaint there. Do not do both, or the customer is compensated twice.
How do I record that the customer accepted the credit?
Ask for a short reply confirming the complaint is settled and keep it with the credit note. A line in the notes saying the credit settles the complaint makes the agreement visible to both bookkeepers.
Who should approve a goodwill credit?
Set a limit per person and record the approver in the notes or your internal file. Unapproved goodwill is one of the first things an auditor or a business partner asks about.
How is tax calculated on this template?
The sales tax depends on where the work is supplied, so set the rate that applies to your customer before sending. The editor keeps the net amount, the tax and the total apart, and recalculates all three when you change a quantity, a unit price or the country setting.
Why issue a credit note instead of editing the invoice?
An invoice you have sent is part of both parties' records. A credit note with its own number, the original invoice number and the reason reduces or cancels it, so both sets of books stay traceable.
Read next
Reading for the Goodwill credit note template: Credit note vs invoice (and credit memo): how to issue one and Unpaid invoice: follow-ups, part payments and statements. The VAT and GST calculator helps you credit the tax that went with the goods.