## Zoho Inventory Documentation Index

Access the complete documentation index at:
https://www.zoho.com/us/inventory/llms.txt

Use this file to discover all available documentation pages before proceeding.

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# The items are not shipped but the payment has been accepted. Is it essential to create a sales return if my customer cancels the entire order before shipping?

It is essential to raise a sales return when the items that were shipped have been returned. To only provide a refund for the cancelled order, you need to create a credit note for the customer. To handle this in Zoho Inventory:

**Prerequisite:** Create a sales order and an invoice with payment recorded. Do not create a package.

*   Open the invoice.
*   Click on **More** and select **Create Credit Note**.
*   Configure the items. **Note:** The items retained in the credit note will be indicated as ‘Canceled Item’
*   Click **Save** to create a credit note.

#### To apply credits to invoices

*   Open the credit note.
*   Click on the **Apply to Invoice** button.
*   You can apply all the credits to a single invoice or distribute it among the pending invoices.
*   Click **Save** to apply the credits.

#### To record a refund

*   Open the credit note.
*   Click on **More** and select **Refund**.
*   Enter the refund amount and select the expense account.
*   Click **Save**.