Credit notes are official documents issued to reduce the original invoice amount to a customer, typically due to returns, errors, or discounts.
You may need to issue a credit note in the following cases:
Data entry errors: If you accidentally issued an invoice for a higher amount than needed, you can use a credit note to adjust the customer's balance.
Canceled services or inventory issues: If a customer cancels a service or you are unable to fulfill an order, you can use a credit note to formally correct the invoice amount due.
Discounts: If you and a customer negotiate a discount on an issued invoice, you can use a credit note to adjust the amount owed without having to void the original invoice and issue a new one.
Recording an overpayment: If a customer overpaid on a previous invoice, you can issue a credit note for the overpaid amount and apply it to their next invoice. This ensures that the customer pays the correct, adjusted balance.
Issue a credit note
Administrators can issue a credit note to invoices with the "Unpaid" status. To do this:
Go to Customers > open the user/company profile > Billing > Invoices page. Alternatively, you can go to Billing > Invoices page.
Open the necessary unpaid invoice.
In the "Credit notes" section, press
Create.
Configure the credit note properties:
Reason - select a reason for the credit note from the dropdown menu.
Set an effective date - enable if you want to set a specific date for when the credit note will be applied. This date must be between the invoice issuance date and today. Disable this option to apply the credit note immediately on the day you issue it.
Description - select the specific invoice item for which you want to issue a credit note.
Set the amount you want to credit by performing any of the following actions:
Adjust the amount by changing the "Quantity" (for items with a quantity greater than 1).
Enter the amount in the "Credit amount" field. The amount should not exceed the total cost of the invoice item.
Memo - add a memo for internal reference if necessary. Memos are visible only to administrators.
Press
Issue.
You can create multiple credit notes per invoice. Once you issue a credit note, the customer receives a push notification in the member web portal and mobile app, as well as a confirmation email.
The credit note amount must be less or equal the total invoice amount, and cannot be negative. If the credit amount equals the total invoice amount, the invoice status changes from "Unpaid" to "Paid".
Understanding the credit note totals
Adjustment total: The total amount of the credit note that will be applied to the invoice.
Current amount remaining: The total amount of the invoice before the credit note is applied.
Adjusted amount remaining: The final amount that will be due on the invoice after the credit note has been applied.
View a credit note
Administrators
Once administrators issue a credit note, they can review it and download the credit note PDF. For this, follow these steps:
Go to Customers > user/company profile > Billing > Invoices. Alternatively, you can go to Billing > Invoices page.
Open the necessary invoice.
Press on the credit note number from the invoice or open it from the "Credit notes" section below.
Once you open the credit note, you'll see all its details. To download it, press
Download PDF.
Users
When administrators issue a credit note, it is reflected in member web portal and mobile apps. To view credit note details, users can follow these steps:
Go to Membership > Billing > Invoices page.
Open the necessary invoice.
Check the credit note from the "Credit notes" section.
The invoice PDF also reflects the credit note.
In Analytics
In the "Invoices" report and charts, invoices with a credit note show as unpaid until they are fully paid.
Transactions for the credit note are not created and are not reflected in the "Transactions" report and payments charts. Only transactions for the final part of the invoice payment are recorded.
Void a credit note
Administrators can void a credit note if the invoice it was applied to still has an "Unpaid" status.
Voiding a credit note is useful if it was issued by mistake or if the original circumstances have changed. This action reverses its adjustment, increasing the amount due on the invoice by the amount of the credit note.
To void a credit note, follow these steps:
Open the necessary invoice.
Press on the credit note number from the invoice or open it from the "Credit notes" section below.
Press the (...) menu top right >
Void.
Confirm your choice. Once voided, the credit note is marked as "Voided" and the invoice amount due is updated accordingly.
Once you void a credit note, the customer receives a push notification in the member web portal and mobile app, as well as a confirmation email.
Voiding a credit note is irreversible.
How to pay the remaining amount
Customers can pay the remaining amount in two ways:
Online payment: The customer can open the invoice in the member web portal or mobile app and pay the remaining amount online. They will only be charged for the outstanding balance.
External payment: If the customer submits the remaining payment externally, the administrator can manually mark the invoice as paid externally.
Once the remaining amount is paid, the invoice status updates to "Paid".
How taxes and coupons apply to credit notes
If the original invoice included a coupon or tax, the credit note will also reflect these amounts proportionally. This ensures that your financial records are accurate, with the credit note correctly reflecting the money that should be paid.
Example:
An invoice has a net price of $100 and a 10% tax, for a total of $110. A 10% coupon is applied, reducing the total amount to $99.
If you issue a credit note for $10, the system will automatically calculate and apply a 10% discount and a 10%. The credit note value (adjustment total) will be $9.90.
This results in a new remaining balance of $89.10 ($99 - $9.90).
Credit notes feature is currently available for pre-payment adjustments on unpaid invoices. The ability to issue credit notes for paid invoices is a capability we plan to implement in the future.