Free Damaged Goods Credit Note Template & Generator
A damaged goods credit note reduces an invoice because part of a shipment arrived unusable. It works off four references at once: the invoice, the sales order, the delivery document, and the claim number your photographs are filed under. Damaged items are credited at their invoiced prices, a share of the delivery charge comes off when freight was billed, and the note states plainly whether the goods go back, get scrapped on site, or are being replaced on a separate order.
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| Description | Qty | Rate | Amount |
|---|---|---|---|
| Damaged goods credit | 5 | $88.00 | $440.00 |
| Freight credit | 1 | $65.00 | $65.00 |
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Use-case checklist
What to include in a damaged goods credit note
Damage credits fail on the question of what happened to the goods. If the note does not say, your inventory shows units that were never returned, the customer assumes a free replacement is on its way, and nobody can tell six months later whether the same 96 square feet was credited once or twice. Freight is the second trap: a flat delivery charge covering three pallets does not vanish because one pallet was crushed, and crediting all of it or none of it both invite a phone call. Naming the claim reference, the damaged quantities at invoiced prices, the freight share, and the disposal instruction keeps the credit tied to a shipment someone can still pull photographs of.
- customer, invoice, order, and delivery reference
- damaged items and quantities
- claim or evidence reference
- item, freight, and tax credit
- return, disposal, replacement, or refund outcome
Example starting lines
| Description | Qty | Rate |
|---|---|---|
| Damaged goods credit | 5 | $88 |
| Freight credit | 1 | $65 |
Complete it cleanly
Reference the invoice, order, delivery, and claim; identify damaged SKUs and quantities; state whether goods are returned, discarded, or retained; and document freight or tax adjustments separately.
How to make a damaged goods credit note in 6 steps
Open the credit note generator
Start from this page so the credit note opens with fields and sample lines already set up for sellers, distributors, and wholesalers. No account is needed to create or preview.
Enter both parties
Add your business name, address and contact details, then the customer name and address exactly as they should appear on the record.
Add the damaged goods lines
Replace each sample line with the real work or goods. Make sure the document shows customer, invoice, order, and delivery reference, damaged items and quantities, claim or evidence reference.
Check the figures
Totals calculate as you type. Confirm quantities, rates, any tax line and the final total against your own records before you send anything.
Set the reference and dates
Give the credit note a unique number and the correct date so it can be traced later and matched to related documents.
Review and download the PDF
Reference the invoice, order, delivery, and claim; identify damaged SKUs and quantities; state whether goods are returned, discarded, or retained; and document freight or tax adjustments separately. Preview is free; a PDF download costs $4.99, or is included with Unlimited.
Worked example
One crushed pallet on a three-pallet tile delivery
Kettleridge Stone & Tile delivered order SO-4471 to the Overlook Inn renovation on May 15, 2026 against invoice INV-8802. Of three pallets offloaded, one arrived with a crushed corner. The site supervisor noted it on the delivery receipt, photographed it before the truck left, and Kettleridge opened claim DC-2026-0331.
- Invoice INV-8802 (May 12, 2026), order SO-4471, delivered May 15 on BOL 553-91204
- $3,886.62
- Exception noted on the delivery receipt at offload and photographed; filed as claim DC-2026-0331
- 1 of 3 pallets
- Credited: 96 sq ft porcelain floor tile, broken in transit, at the invoiced $4.25 per sq ft
- $408.00
- Credited: 4 bags thinset, bags split and contents wet, at the invoiced $23.00
- $92.00
- Damaged goods credited at invoiced prices
- $500.00
- Freight credited: one of the three pallets covered by the flat $285.00 delivery charge
- $95.00
- Sales tax credited at the illustrative 7.0% rate used on INV-8802, applied here to the $500.00 of goods and not to the freight line
- $35.00
- Disposition: damaged tile and thinset scrapped on site on Kettleridge's written instruction; no return authorization issued
- Not returned
- Total credit, note CN-0620 (May 22, 2026)
- $630.00
- Balance payable on INV-8802; replacement tile ships on SO-4498 and is billed separately
- $3,256.62
The trap is the free reship: sending replacement tile against the same invoice with no credit and no new order leaves your inventory short, the original invoice overstated, and the customer with nothing showing the second delivery was paid for. Credit, then bill the replacement on its own order. The 7.0% rate and the choice to tax goods but not freight are illustrative for this example; both the rate and which charges sit in the taxable base depend on your jurisdiction, so confirm the treatment with your accountant rather than copying the figures here.
When this document is the right choice
Use this credit note to document a reduction or reversal against an issued invoice. A credit note changes the amount owed on an earlier invoice without deleting the original record. Reference the original invoice and state the exact reason for the adjustment.
Frequently asked questions
The driver would not wait while we opened the pallet and we signed clean. Is the credit dead?
Not automatically, but it gets harder, because a clean signature is the strongest thing the other side has. Photograph the pallet, the shrink wrap, and the damage as soon as you find it, keep the packaging, note the date and who opened it, and tell the seller the same day rather than at month end. What you can recover depends on the sales terms and the carrier's conditions rather than any general rule, so ask the seller how they want concealed damage reported.
Should I credit the damaged items and re-bill the replacement, or just reship at no charge?
Credit and re-bill on a new order, as in the example: CN-0620 for $630.00, replacement tile on SO-4498. A silent reship makes the original invoice overstate what the customer actually received, leaves the replacement units with no cost attached, and gives your warehouse a movement with no paperwork behind it. If the replacement is genuinely free to the customer, say so with a discount line on the new order that brings it to $0.00, so the goods still move through a document.
The customer wants to keep the damaged goods at a reduced price. How do I write that?
That is a salvage allowance rather than a full credit, and it should look different on the page. Keep the item on the original invoice at its invoiced price, then add one credit line naming the allowance and its basis, for example 40% of $408.00 on 96 sq ft of chipped tile the customer will cut into a back-of-house area. Add a sentence recording that the goods stay with the customer, so nobody later expects them back and nobody credits the same tile twice.
Only one pallet of three was damaged. How much of the delivery charge comes off?
Pick a basis you can defend on the page and write it there. In the example a flat $285.00 covered three pallets, so one pallet is $95.00, which is easy for the customer to check. Where the charge is weight-based or per-mile, prorate on that measure instead and name it. What causes arguments is crediting freight with no basis shown, or crediting all of it because the delivery felt spoiled, when two of the three pallets were fine and are being installed.
Who files the claim against the carrier, and does the customer wait for it to settle?
Keep those two clocks apart. Whoever holds the contract of carriage files, which on a delivery you arranged and billed is you, and the customer should not be waiting on the outcome to get its money: issue CN-0620 once the damage is agreed, then pursue the carrier on your own timetable. What you need from the customer is evidence, and you need it while the truck is still in sight. Ask for the delivery receipt with the exception written on it and the driver's name, photographs of the wrap and the load before anything is moved, the pallet and carton counts, and the weight if the claim will be settled by weight. Tell the site to hold the packaging until you release it, which is the step people skip and then cannot undo. What the carrier's own conditions and your sales terms let you recover, and how quickly you have to report anything, are set by those documents rather than by any general rule, so read them before you promise the customer a recovery.
More credit note templates
Start with the closest business workflow and adjust the details.