I would send a payment receipt and a statement. You can't issue a credit note for a payment.

Or, if they paid an invoice that you deleted or changed after printing because of returned goods, re-create it, record the returned items on a separate invoice, and send that.

Sage 50 does not show the words 'Credit Note' on an invoice with a negative balance, so you might need to get a self-inking stamp if they need to see those words.

yes what happened is that we had sent them an invoice and then they told us it was wrong, we then adjusted the invoice but they paid the original by mistake. I have posted the payment and now the overpayment amount is sitting there waiting to be applied against something.

I was going to create an Invoice with a negative amount but if i do that what "Account" would I choose as this is not a sale so I dont want my accounts to be affected when I do a report, my boss will wonder why a certain category is down by 400$

You could also change the invoice to be 'wrong' again, and create an offsetting credit invoice with negative amounts for the corrections.

Note that you should not (and cannot) adjust the customer payment after adjusting the invoice. Perhaps to prevent fraud, that payment is 'locked' to the version of the invoice that was paid. But after adjusting the original invoice, you will be able to post another 'zero dollar amount' payment to clear the balance of the payment (the prepayment) against the adjusted, partially paid invoice.

Once an invoice leaves your hands, it's probably best to issue a credit note rather than adjust it. The customer's payables person may not ever see the corrected copy, or may post it *again*!

ok if i do that then the accounts will ofset itself which makes sense.