The reason for generating a credit note could be to reimburse a customer for a returned item. If this is the case, we suggest you read the Creating a Return article.
This article is for situations where you want to give a customer a credit note for a reason other than return transactions. For example, the customer received their goods three months late and you want to provide a credit note as good faith.
...
3. Next ensure you are searching by the correct status. An Open status will return all unpaid invoices, All will search for invoices and credit notes and CR Note will return only credit notes.
4. Click Click the Search button
5. The next step is setting up the payment of the invoice. Remember, you have to pay an invoice in order to generate a credit note. Enter the amount the customer is going to pay in Received box, it's optional to write a comment in the box next to it. Select the payment Method from the drop down, and then the Date that the payment is being made. If you make a mistake, click Clear button to start again.
...