> ## Documentation Index
> Fetch the complete documentation index at: https://docs.getlago.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Credit notes and adjustments

> How credit notes, voids, and coupons reduce recognized revenue.

Sometimes you give revenue back: a refund, a correction, a discount, or a cancelled invoice. These are **contra-revenue** events. They reduce recognized revenue, and Lago records them on the day they happen, in the period they happen, without rewriting the revenue you already recognized earlier.

## Credit notes

A credit note reduces what a customer owes you, either as a refund or as credit toward future invoices. Lago recognizes the reduction (the contra-revenue) when the credit note is issued, and splits out the tax portion separately.

A customer was invoiced \$1,000 (pre-tax) on January 1 and the revenue is being recognized across January. On January 20 you issue a \$300 credit note.

| Date           | Event                         | Recognized revenue impact | Explanation                                                                                                       |
| -------------- | ----------------------------- | ------------------------- | ----------------------------------------------------------------------------------------------------------------- |
| Jan 1 – Jan 19 | Subscription recognized daily | Building up normally      | Revenue earned day by day.                                                                                        |
| Jan 20         | \$300 credit note issued      | −\$300.00 in January      | The reduction lands in the period the credit note is issued. Revenue recognized before the 20th is not rewritten. |

If the credit note is refunded in cash, the cash leaves when the refund actually settles. If it's applied as credit toward future invoices, it sits as a credit balance the customer can draw down later.

## Voids

Voiding an invoice cancels it entirely, even months after it was issued or paid. Lago reverses the recognized revenue and the tax tied to that invoice, as contra-revenue, on the void date. The reversal lands in the current period, not the original one.

## Coupons

A coupon is a discount applied at invoicing, before tax. It reduces the revenue recognized from that invoice. The customer was never going to pay the discounted portion, so it's never recognized as revenue.

## Manual adjustments

Editing a fee on a draft invoice changes the amount that will be recognized. The difference is treated as an adjustment to revenue. Once the invoice is finalized, the recognized amount follows the final fee.

## What this means for your reports

* Contra-revenue events show as **negative** amounts in the [Recognized Revenue report](/guide/revenue-recognition/reports/recognized-revenue) for the period they occur.
* They appear as distinct lines in the [Journal Entry Details](/guide/revenue-recognition/reports/journal-entry-details), so you can trace every reduction back to its credit note, void, or coupon.
* Recognized revenue earned in earlier, closed periods is never restated. The reversal is always booked in the current period.