AliExpress returns, refunds, and replacements: create credit notes and correct invoices without breaking your books

AliExpress is incredible for sourcing, but its returns and refund workflows can feel opaque when you are running a real business with real books to close. Orders get canceled, items arrive damaged, buyers ask for replacements, and suddenly your tidy profit report is out of sync with reality. The missing piece is disciplined documentation. That means issuing credit notes when you grant refunds, correcting invoices when details change, reconciling to payments, and keeping a clean audit trail.

Returns are not rare edge cases. Retailers expect 16.9 percent of 2024 sales to be returned, according to the National Retail Federation and Happy Returns, with total retail returns reaching an estimated 890 billion dollars in the United States alone. The same analysis notes that 76 percent of shoppers consider free returns a key decision factor and 67 percent will avoid a retailer after a negative returns experience, which makes your post‑purchase process as strategic as marketing. You can see those numbers in the NRF and Happy Returns report, which also highlights the rising cost of bracketing among younger shoppers and the need to modernize reverse logistics (NRF and Happy Returns report: https://nrf.com/media-center/press-releases/nrf-and-happy-returns-report-2024-retail-returns-total-890-billion). Shopify’s enterprise research reaches a similar conclusion and pegs ecommerce returns at the same 16.9 percent average, while outlining practical ways to reduce and manage them (Shopify enterprise returns guide: https://www.shopify.com/enterprise/blog/ecommerce-returns).

If you run a dropshipping store or buy inventory via AliExpress, you also face a documentation gap: AliExpress does not natively give you accounting‑ready invoices for the orders you place. That is exactly the problem AliBilling solves with a one‑click invoice generator inside AliExpress My Orders. In this guide, you will learn how to align AliExpress return scenarios with sound bookkeeping, how to issue credit notes and corrections that meet common regulatory expectations, and how to do it fast with AliBilling so you do not break your books or your day.

What AliExpress buyer protection actually covers and the clock you are on

AliExpress Buyer Protection spells out what happens when items arrive damaged, do not match their description, or do not arrive. AliExpress says Buyer Protection lasts 15 days from the moment you confirm receipt, and you can either contact the store, request a refund only, or apply for return and refund if you cannot reach an agreement. They add that refunds generally reach you within 1 to 10 working days depending on the payment method, and that return shipping is covered by you for change‑of‑mind cases but by the store if an item is defective or incorrect. Those details are stated on AliExpress’s Buyer Protection page (AliExpress Buyer Protection: https://www.aliexpress.com/p/buyerprotection/index.html).

AliExpress also documents when the dispute button appears and when it expires. Their help center clarifies that you can open a dispute from the 11th day after the seller says the goods were sent, up to the 15th day after the delivery time is over or after you have confirmed receipt. If you paid with PayPal, a separate 180‑day PayPal window exists, but AliExpress disputes still follow the platform window (AliExpress Help: Open a dispute: https://service.aliexpress.com/page/knowledge?pageId=82&knowledge=1060015227&language=en). Put those dates on your SOP checklist, because once the window closes, your accounting adjustments can still happen, but your cash recovery likely cannot.

Why credit notes and corrected invoices matter for returns

When you refund a customer or cancel a purchase you no longer receive, your accounting records must reflect the reduced consideration. That is not just good practice. In the European Union, the VAT Directive requires a reduction of the taxable amount when the price is reduced, the contract is canceled, or performance is refused. The Court of Justice has confirmed that Article 90(1) requires member states to allow such reductions for cancellation or refusal, while allowing a limited derogation for non‑payment under Article 90(2). The ruling in Lombard v. Hungarian Tax Authority explains that a definitive termination that reduces the consideration counts as cancellation or refusal, triggering the reduction (CJEU case C‑404/16, Article 90 VAT Directive: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62016CJ0404).

In the United Kingdom, HMRC’s VAT guidance specifies how a valid credit note should be structured and how you correct an invoice. HMRC lists the fields a credit note must include, such as your business details, the customer’s details, the identifying number and date, the original invoice number, the VAT being credited in sterling, and a description linking the credit back to the original supply. HMRC also explains when to issue supplementary invoices or corrective notes and how to adjust your output tax and records accordingly (HMRC VAT Notice 700, credits and debts and invoices sections: https://www.gov.uk/guidance/vat-guide-notice-700). For general bookkeeping in software, Xero’s guide explains that a credit note, also called a credit memo, is a legal document you issue against a specific invoice to cancel it or reduce the amount, and it summarizes the essential components to include, like the original invoice number, credit amount, and reason (Xero guide on credit notes: https://www.xero.com/uk/guides/credit-notes-explained/).

Even where you do not charge VAT, the business principles are the same. Your sales ledger must show the negative entry tied to the original invoice, and your bank reconciliation needs to match the refund or chargeback. For audit‑readiness, keep the returned‑goods evidence, the dispute communications, and the refund proof stapled to the credit note and the original invoice in your digital folder.

Common AliExpress return scenarios and the correct paperwork for each

Below are practical playbooks you can copy. They preserve the audit trail and keep your numbers consistent.

1. Full cancellation before shipment

• Trigger: the seller confirms they cannot ship or you cancel before dispatch.
• Action: if you already generated an invoice for your own records or provided one to your buyer, issue a credit note that references that original invoice number and credits the full amount. If you never issued an invoice, do not create one. File the platform cancellation instead.
• Reference: HMRC allows using a credit note to cancel an invoice and restore the correct VAT position where applicable (HMRC VAT Notice 700, section 18).

2. Goods defective or not as described with partial refund

• Trigger: you negotiated a partial refund instead of a full return.
• Action: issue a credit note for the amount refunded, referencing the original invoice and stating the reason, like partial allowance for damaged goods. Do not adjust quantities if the goods remain with your customer. If you also send a replacement unit, see the replacement logic below.
• Reference: the EU Article 90 principle requires reducing the taxable amount where the price is reduced after supply (CJEU C‑404/16). HMRC outlines that credits must reflect a genuine overcharge or agreed reduction with clear linkage to the original invoice.

3. Replacement goods issued

• Option A, leave the original invoice in place and supply the replacement at no charge. HMRC guidance allows letting the original VAT charge stand and providing a free replacement, provided you do not also account for VAT on the replacement. Keep an internal delivery note referencing the original invoice (HMRC VAT Notice 700, section 18.3).
• Option B, cancel and re‑invoice. If the entire supply is repudiated and re‑supplied, credit the full original invoice and issue a new invoice for the replacement shipment.

4. Price adjustment agreed after sale

• Trigger: bulk discount applied after the fact or shipping charge waived.
• Action: issue a credit note for the reduction only, clearly stating the reason. If you inadvertently undercharged VAT or mis‑stated amounts, HMRC explains how to issue a supplementary invoice to charge the right amount and how to reference the original invoice in the correction (HMRC VAT Notice 700, section 19.8).

5. Full return and refund after receipt

• Trigger: buyer returns the item within buyer protection and you refund in full.
• Action: issue a credit note for the invoice total. If you refunded outbound shipping, include that in the credit. Make sure the bank movement reconciles to the credit memo balance.

Where AliBilling fits in and how to set it up in 60 seconds

AliBilling gives you compliant, printer‑friendly PDFs for every AliExpress order you place, directly inside the AliExpress My Orders page. The extension adds a Download invoice button next to each order, old and new. You can add your company name, address, tax or VAT IDs, and even adjust date formats and supplier details so every PDF reflects your business profile. The workflow is straightforward and documented in AliBilling’s setup guide:

• Create your account and enter your buyer details, including your tax information if you want it printed on your PDFs (How to download invoice from AliExpress).
• Install the free Chrome extension so the Download invoice button appears on AliExpress orders (Get the extension).
• Click the button to download a ready‑to‑file PDF for each order. You can print or keep it electronically.

The tool emphasizes one‑click retrieval, unlimited invoices, clean customization, global availability, and 24 by 7 live support. Pricing on the website is a low 29 dollars per user per year with unlimited downloads and support (pricing). The Chrome Web Store listing has additional flexible options that some users prefer, such as quarterly, semiannual, or lifetime plans. If you need help, start with the FAQs or reach out via contact.

How to document credit notes and corrections when the original invoice came from AliBilling

AliBilling generates your purchase invoices for accounting, which you then ingest into your ledger or accounting software. When a return or refund happens, you create the credit note in your accounting system and link it to the AliBilling invoice you previously posted. Here is a repeatable approach that mirrors how software like Xero or QuickBooks handles credit memos, while preserving the AliBilling PDF as the source document.

• Find the original invoice you posted for the AliExpress purchase. Attach the AliBilling PDF if you have not already.
• Create a credit note in your accounting system that references the exact invoice number you used. If your software supports it, copy the line items and enter negative quantities or a negative amount for the credit.
• Include a clear reason, like Order canceled by seller, Partial refund due to damage, or Replacement issued at zero charge.
• If you are in a VAT or GST regime, ensure the VAT rate and the VAT credited match the original tax treatment, as HMRC explains that credits must use the rate in force at the original tax point (HMRC VAT Notice 700, section 18.2.5).
• Attach evidence: AliExpress dispute screenshots, correspondence, refund ID, shipping photos. Keep it in the same digital folder as the original invoice and the credit note.
• Reconcile the refund receipt or card reversal to the credit memo. If the platform issued the refund to a bonus account or wallet, document the transfer back to your bank when it happens, then match the final movement.

If you prefer a template‑driven approach, Xero’s guidance shows how to create credit notes directly from invoices and auto‑apply them to open balances. It also lists all the fields a proper credit note should contain (Xero’s credit notes explainer: https://www.xero.com/uk/guides/credit-notes-explained/). The result is the same: your ledger reflects the reduction, and your audit trail ties the credit to the original invoice and to the evidence of the return.

EU IOSS, marketplace VAT, and what that means for your records

If you are shipping goods to EU consumers, marketplace VAT rules may affect what appears on your documents. From 1 July 2021, the EU introduced the One Stop Shop and Import One Stop Shop to simplify VAT for cross‑border ecommerce. The European Commission explains that online marketplaces can be deemed suppliers in certain cases and that the Import One Stop Shop exists to collect VAT at checkout for distance sales of goods not exceeding 150 euros imported from third countries (European Commission IOSS overview: https://vat-one-stop-shop.ec.europa.eu/index_en). In practice, AliExpress often collects VAT for low‑value consignments bound for the EU as a deemed supplier, which means the VAT for the retail sale to the final customer is handled at checkout.

Two consequences follow for your documentation. First, invoices you generate with AliBilling are purchase invoices for your business buying from a supplier, not sales invoices to your end customer, unless you adapt them as such for your store’s customer billing. Second, if VAT was charged by the platform on the consumer sale under IOSS, you would not claim that consumer VAT as input tax on your AliExpress purchase invoice. You are still responsible for recording your own revenue, your purchase cost, and any refundable VAT legitimately charged to you on actual taxable supplies to your business. If in doubt, consult a local tax advisor. The principle you should follow is to match VAT claims to the taxable supplier‑to‑business supply you received, not to consumer VAT collected by a marketplace at retail.

A simple SOP to unify returns, credit notes, and AliBilling invoices

Use this “quick SOP” the next time a return or refund hits your queue.

1. Capture the signal

• Save the AliExpress dispute or chat transcript. Screenshot the Buyer Protection page showing the timeline if helpful. Note the date relative to the dispute window documented by AliExpress (dispute timing help: https://service.aliexpress.com/page/knowledge?pageId=82&knowledge=1060015227&language=en).

2. Verify the cash flow

• Confirm whether the refund is full or partial, and whether the funds will go back to the original payment or to a bonus account. AliExpress says refunds generally arrive within 1 to 10 working days depending on method (Buyer Protection page: https://www.aliexpress.com/p/buyerprotection/index.html).

3. Locate the original invoice

• Find the AliBilling PDF for the purchase and the posted ledger entry. If you have not yet generated the invoice, retrieve it now with the AliBilling button in AliExpress My Orders (how‑to).

4. Issue the credit note

• In your accounting system, create a credit note that references the original invoice number. Use the correct VAT treatment and include the reason. Attach evidence.

5. Resolve replacements

• If you are sending a replacement at no charge, follow the replacement option you prefer: leave the original invoice and document a zero‑charge replacement delivery, or credit fully and re‑invoice the replacement, both approaches recognized in HMRC guidance (HMRC VAT Notice 700, section 18.3).

6. Reconcile and close

• Match the refund to the credit. If the refund passes through an intermediary wallet, document the flow from bonus account to bank. Update your inventory if the item is returned to you.

7. Organize and retain

• Keep the original invoice, the credit note, refund proof, and communications together. If you operate in the UK, HMRC expects you to retain records, including credit notes, for six years. Other countries have similar retention rules (HMRC VAT Notice 700, records sections).

Invoice corrections without tears

Sometimes a return is not the trigger. You might discover a wrong buyer address, a missing VAT ID, or a mispriced line item. Correct these with the least friction and the cleanest audit trail.

• Administrative details like a typo in the billing address can be corrected by re‑issuing an updated PDF with the same invoice number in your internal archive if no external tax record is affected, while preserving the original copy. If a tax invoice was already issued to a VAT‑registered customer, follow your jurisdiction’s rules. HMRC notes that when correcting a VAT invoice error with your customer, issue a credit note or a supplementary invoice that references the original invoice and shows both the incorrect and the correct VAT amounts (HMRC VAT Notice 700, section 19.8).
• Price errors where you overcharged are fixed with a credit note for the difference. Price errors where you undercharged require a supplementary invoice for the undercharge, with the proper tax point treatment per your rules.
• AliBilling helps by letting you set the correct buyer details, tax IDs, supplier names, and date formats before you generate the PDF, so you can avoid most of these corrections at the source (AliBilling how‑to).

A quick note on store returns policies and platform fit

While you perfect your internal paperwork, make the customer‑facing returns experience just as good. The same NRF report that tracks return rates found that consumer expectations are reshaping shopping behavior and that retailers are prioritizing return capacity and fraud prevention (NRF and Happy Returns report: https://nrf.com/media-center/press-releases/nrf-and-happy-returns-report-2024-retail-returns-total-890-billion). If you are building your shop or considering a platform upgrade, it is worth selecting tools that support returns and exchanges natively, order tracking, and reverse logistics integrations. Shopify has strong returns apps and documentation on handling returns at scale and is an excellent fit for many SMB ecommerce teams. If you are starting or replatforming, explore Shopify here Shopify.

Pricing, support, and getting help fast

AliBilling is designed to be dead simple and low cost. The website lists a 29 dollars per user per year plan that includes unlimited invoice downloads and live support (pricing). The team provides 24 by 7 help via chat and the contact page. For setup questions, see the how‑to guide and the blog guide. For legal and privacy terms, read the terms of service and privacy policy. If you are new to dropshipping compliance, AliBilling’s primers on tax basics for dropshippers and running your business the legal way are useful references.

Final practical tips that save hours and headaches

• Time your actions. Add the AliExpress dispute windows to your calendar template. The dispute button typically appears from day 11 after shipment and remains available until 15 days after the delivery time ends or after you confirm receipt (AliExpress Help: https://service.aliexpress.com/page/knowledge?pageId=82&knowledge=1060015227&language=en). Keep the 1 to 10 working day refund expectation top of mind when forecasting cash.
• Keep numbering sequences separate. Your invoice number series and your credit note series should be unique and sequential. Xero’s guidance notes you can use a separate series for credit notes to avoid confusion (Xero: https://www.xero.com/uk/guides/credit-notes-explained/).
• Do not duplicate tax claims. If an EU consumer VAT was collected by a marketplace under IOSS at checkout, do not try to reclaim that on your purchase records. The European Commission explains the IOSS simplification and marketplace deemed supplier model here (European Commission IOSS: https://vat-one-stop-shop.ec.europa.eu/index_en).
• Replace or credit consistently. If you send replacements, either keep the original invoice and document a zero‑charge replacement or credit and re‑invoice. HMRC recognizes both approaches in its replacement rules (HMRC VAT Notice 700, section 18.3).
• File everything together. When you attach your AliBilling invoice PDF, also attach the credit note PDF, refund screenshot, and dispute transcript. This is the best defense against audit anxiety.

With the right process, returns and refunds stop being scary exceptions and become routine, traceable adjustments. AliBilling closes the invoice gap that AliExpress leaves open. Your accounting software takes care of the credit notes. And a disciplined SOP keeps your cash, compliance, and customer experience aligned even when products come back the way they went out.