Free General Contractor Credit Note Template
Issue credit notes for construction project refunds, material returns, and billing corrections. Free PDF, no signup.
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How does a general contractor handle a credit note?
A general contractor issues a credit note when an invoiced job costs less than billed or materials come back, such as a deposit exceeding the work done or returned structural timber. The note references the original invoice, names the credited item, and reduces the client's balance to match.
Typical line items
- Original invoice number and date
- Deposit excess credit, work value below deposit held
- Returned structural timber, design change post-invoice
- Reason for the credit
- Credited amount
- Revised balance due
- Tax adjusted in proportion
How the work is charged
Credit a deposit excess at the difference between what was held and the value of the work actually completed. Returned materials are credited at their unit price from the original invoice.
Payment terms and deposits
Refund the credit to the original payment method or offset it against the next progress invoice, referencing the original invoice number. State the balance now due after the adjustment.
Tax and compliance
Where the original invoice carried VAT or sales tax, a credit note usually reverses that tax in proportion to the amount credited. Tax handling for materials and labour can differ by region, so confirm what applies to you.
Frequently asked questions
A client cancelled a loft conversion after groundwork was complete. How do I calculate what to retain from the deposit?
Calculate the value of all work completed, materials purchased and not returnable, and any third-party costs already incurred. Issue a credit note for the portion of the deposit that exceeds this total. Provide a breakdown with the credit note so the client can see exactly how the retained amount was calculated.
A change order reduced the scope of a project after I had already invoiced the original scope. What documents do I need?
Issue a credit note for the work removed from scope, then issue a new invoice for any additional work the change order introduces. Keep the credit note and the new invoice separate rather than netting them together. This keeps your audit trail clean, especially on larger projects with multiple change orders.
My subcontractor issued me a credit note after an error on their invoice. Do I need to pass this credit to my client?
Only if the original subcontractor cost was passed through to the client on your invoice at cost. If you build subcontractor costs into your overall project fee, the credit is absorbed into your margin and does not need to be passed on. If you itemised the subcontractor cost and the client paid it directly, issue a corresponding credit note to the client.
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Read the complete credit note guide to see when to issue one and how it adjusts an invoice already sent.
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