Billing mistakes can happen to anyone. However, they do not have to mean problems - they just need to be corrected accordingly. However, there are two documents in legal circulation that are easy to confuse with each other. These are notes and corrective invoices. Corrective note and corrective invoice - what's the difference? When is the corrective note and when the invoice? Who can issue them and in what situations? We explain!
Correcting note and correcting invoice - differences not only in nomenclature!
Corrective note and corrective invoice are two instruments for fixing mistakes on invoices. It is completely wrong to use these terminology interchangeably and it often causes numerous misunderstandings and, consequently, accounting problems.
- Note correcting only errors in the invoice description, e.g. a mistake in the tax identification number, address or date of sale, and it can be issued by the buyer of the invoice. So you receive an invoice and you notice that the issuer mistook the name of your company, gave the wrong NIP number, made a typo in the address, indicated the wrong date of sale, collection, payment date or vehicle registration number (in the case of fuel purchase) - you can prepare a corrective note yourself (or ask your accountant for it) and give it to the seller.
- Correct errors in items on the invoice, such as price and VAT rate, can only be corrected by a correcting invoice. And the only person authorized to issue it is the seller - not the buyer. Of course, with the help of a corrective invoice, formal errors (NIP or address) are also eliminated. The correcting invoice is then simply attached to the original one - and can replace the correcting note. This is not the case with a correction note: it cannot replace an invoice correction if the errors relate to document items.
The invoice correcting the items of the original invoice is posted in the records, and the invoice correcting the formal data is not posted, as is the memo.
Corrective invoice and corrective note - what must both documents contain?
The rules for issuing both of these documents are regulated quite strictly by the Goods and Services Tax Act. In Art. 106k sec. 3 of the legislator document specifies formal requirements for corrective notes, which must include:
- the designation "CORRECTIVE NOTE",
- serial number and date of issue,
- first and last names or names of the issuer of the note and the issuer of the invoice or correcting invoice and their NIP numbers and addresses,
- all data that are included in the corrected invoice - i.e. the number, parties to the transaction, date of issue, names, quantities of goods or services to which it relates,
- quoting the content of incorrect information and content after correction.
Issuance of a correcting invoice is governed by the previous article (106j) of the aforementioned act. Due to the (usually) necessary posting of a corrective invoice, there are slightly more such formal premises. The correcting invoice should contain:
- date of issue,
- invoice number within the numbering series used,
- number identifying the invoice to which the correcting invoice relates in the National e-Invoices System for the correcting invoice being a structured invoice,
- names and surnames or names and addresses of the buyer and seller,
- number by which the taxpayer is identified for tax purposes (usually NIP number),
- the number by which the buyer of goods or services is identified for the purposes of tax or value added tax, under which he received the goods or services,
- data contained in the invoice to which the correction applies, including the name (type) of the goods or services covered by the correction,
- When the adjustment affects the change in the tax base or the amount of tax due, it is also the amount of the tax base adjustment or the tax adjustment amount, respectively due broken down into amounts for individual tax rates and exempt sales,
- if the change does not affect the tax base - the correct content of the corrected items.
The correction invoice may also contain the indication "CORRECTION INVOICE" or "CORRECTION" and indicate the reason for the need to make the correction.
When is the correcting note and when is the correcting invoice?
Exposure correction note is enough to fix most mistakes in the invoice description, this also applies to the buyer's tax identification number. So if you receive an invoice with an error in your NIP and therefore you have no chance to settle it, you can use the corrective note - instead of asking the seller to correct the invoice. Importantly, the law does not impose a time frame in which the note should be prepared. So you can do it even if a lot of time has passed since the invoice with the error was issued.
By however, you cannot change the entity completely – for such an operation you need a correcting invoice. In such a situation, the seller should already issue a correcting invoice to zero for the invoice with incorrect data, and then prepare the sales invoice again with the correct data.
You already know when the note. And when is the corrective invoice? For the correct correction of the invoice, i.e. o issuing a correcting invoice, you must take care if there are errors in the items on the invoice, e.g. in the price, VAT rate, quantity, measures. Additional premises for the preparation of a correcting invoice include a change in the tax base or the amount of tax indicated on the invoice, as well as the return of goods or packaging and the whole or part of the payment or the granting of a reduction or rebate.
Corrective invoice and corrective note - what about the acceptance of documents?
When, as a buyer, you issue an invoice correction note, you must provide it to the invoice issuer, who should accept it. It is certainly worth doing it the traditional way - that is, sending the seller two copies of the document and asking for one signed copy to be sent back. Acceptance of the corrective note is required by law, but its method has not been specified, so you can also use the electronic way.
Acceptance of the document is also necessary in the case of a correcting invoice in order to be able to book it; in most cases, however, you need to have documentation of the adjustment conditions, which is discussed below.
How does the posting of a corrective invoice look like?
In the case of correcting an invoice containing a calculation error and a mistake, but "in plus", i.e increasing the tax base, the case does not require any additional formalities – you just have to go back to the time when the original invoice was included, or book it in the current period, when the adjustment relates to such new circumstances as the return of goods.
The situation is different in the case of a "in minus" correcting invoice, which reduces the tax base. In connection with Slim VAT the seller is entitled to book the correcting invoice "in minus" only if it has documentation confirming the conditions of the correction. It includes, for example, contract annexes, correspondence and proofs of payment, from which it is clear that both parties know and accept the changed terms of the transaction. The obligation to have such additional documentation is not applicable in some situations (e.g. in the export of goods and intra-Community supply of goods), but it is worth bearing in mind.
Invoice and corrective note - how to find yourself in it?
To sum up - you receive an invoice with an error in the description, e.g. in the NIP number, you can issue a corrective note: you inform the issuer of the original invoice about it and ask for approval. You do not book the note, but attach it to the invoice. You receive or issue an invoice with an error in the item - you apply for issuance or prepare a correcting invoice. You must take care of the acknowledgment of receipt and documentation confirming the conditions of the adjustment (e.g. correspondence with the buyer).
Issuing notes and corrective invoices is usually possible with an invoicing program. You then post the document, going back to the correct period or on an ongoing basis, depending on the reason for the post-invoice correction.
In terms of Your accountant will help you correct invoices. And if you deal with accounting yourself, we encourage you to consult Open Profit. Our specialists will tell you how to properly solve your problem.
- What is the difference between a credit note and a credit note?
A correcting note is a document that corrects errors in the invoice description, e.g. incorrect NIP or address or product/service designation. It is not booked but attached to the original invoice. If errors appear on the invoice in items, relate to prices or quantities or VAT rates, a correction should be issued to it, i.e. a corrective invoice.
- When is the credit note and when is the credit note?
A corrective note is a sufficient solution only in the case of mistakes in the document description, such as an incorrect NIP number, address, name of the entity, but also the date of issue/sale/service performance and the date of payment and designation of the product or service. Other errors, especially in items, require a correction invoice.
- Note and corrective invoice - when is an invoice necessary?
A corrective invoice is necessary when there are mistakes in prices, quantities, measures and units or VAT rates on the invoice. You cannot replace the correcting invoice with a note also when the correction would completely change the entity appearing on the invoice.