Define credit note
A credit note can be issued to correct a mistake if the invoice has been overstated or to reimburse the buyer completely if the goods have been returned.
Think of it in terms of shopping. Say you bought a pair of jeans, got them home, they had a flaw and so you took them back. The store, it turns out, doesn’t do refunds, however they give you store credit. So you can spend that same amount of money in their store… but you can’t have cash back.
A credit note works the same way. A seller will allow you to spend a certain amount of money to buy specific goods or services from specific vendors, but you can’t just turn it in and get cash.
Other examples are an account to get a carpet replaced, a furnace fixed, or a free cup of coffee once you’ve had your coffee card punched seven times.