My question relates to payment terms for credit notes. Within our system, credit notes are issued with immediate payment terms, and not that of the customer's standard terms. Is this a normal/correct practice?

When you say “credit note,” do you mean that your company is extending a monetary instrument that allows a buyer to purchase your products at a future date? If our understanding is incorrect, please let us know.

Some companies issue credit notes as a way for a seller to provide a goodwill gesture to customers who return goods, where the original sales agreement does not have specific language for a refund policy. This allows the buyer to purchase other items from the seller (your company). If this scenario is what you are asking about, then how long you make it valid depends on what your management team is willing let age on the account. Some companies put it at a year (similar to gift certificate expiration), but it really depends on your management's philosophy on how long they feel it should be available.

The fact that your system issues the credit note as due upon receipt (vs. 30 days) can actually be a way for you to see how long it takes from the date of issuance to the date it is finally used. You can document in the body of the credit note how long it will be valid before it expires (if it expires at all—but it would be a good idea to have an expiration date).

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