How a Customer Credit Balance Arises

Availability: all plans

A customer credit balance is money or value you are holding for a customer that they have not yet used. It is kept per customer, as a running record in which every addition and every use is its own dated line. This guide explains the five ways a balance gets created, so you can tell a customer exactly why they hold credit with you.

Before you start

Issuing credit, whether against an invoice or to the account, needs permission to issue refunds and credits.
A customer's balance is only ever held by you. It cannot be used with another provider.
Whether a credit can later be handed back as money depends on where it came from. Money the customer paid in can go back to them. Credit you gave can be spent on future work but is not refunded as cash.

How credit arises

A deposit is paid. When a customer pays a deposit invoice, the amount they actually paid becomes credit on their account. A deposit paid for less than the invoice asked for creates credit for the smaller amount. The history shows it as Deposit paid. This is the customer's own money, so it can be returned.
A payment exceeds what was owed. If you record a payment larger than the invoice's amount due, the invoice is settled and the excess becomes credit. The history shows it as Overpayment. This is also the customer's own money and can be returned.
You issue a credit against an invoice. On an issued invoice, Issue Credit lowers what the sale was worth and returns the tax with it. Any part of the credit that the customer still owed on that invoice is used to pay it down first. Only what remains after that, which exists only where they had already paid more than the corrected price, is left on the balance. The history shows Credited an invoice.
You issue account credit. On the customer's Billing tab, under Credit Balance, Issue account credit gives credit that names no invoice, such as goodwill. No sale changes and no tax moves. The history shows Account credit. This credit can be spent on future work but is not refunded as cash.
You release package funds to credit. On the customer's Billing tab, under Packages, funds a customer paid towards a prepaid package can be moved with Release to customer credit, after you enter a Reason for customer credit. The released amount is added to their balance.

Steps: check why a customer holds credit

Open the customer, then the Billing tab, then Credit Balance.
Read the figure at the top. If part of the balance is not refundable, a line beneath it says how much can be refunded.
Read the history table with the columns Date, What, Why and Amount. Additions are green and uses are in the normal text colour.

Tips

Use Issue Credit on the invoice when the price really was wrong, and Issue account credit when it was a gesture. The first changes the sale and its tax; the second does not.
Always fill in Why. It appears in the history, and your customer sees the kind of movement on their own page.
A credit you issue against an invoice is limited to that invoice's total. Anything larger belongs on the account as account credit.

If something goes wrong

If Issue Credit is missing, the invoice may be a draft or void, or you may lack permission. A draft has no agreed price to reduce yet; change its line items instead.
If the amount is refused as too large, it exceeds the invoice total. Issue the extra as account credit.
If a customer says they paid a deposit but see no credit, check that the deposit invoice shows as paid. Credit is created when the invoice is settled, once per deposit invoice.

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