Credit notes or write-offs serve to adjust the total payable amount from your clients. Credit notes act as negative invoices, effectively canceling any unpaid amounts you no longer want to pursue or invest effort in collecting. When issuing a credit note, you confirm the total outstanding balance reduction for a specific client.
On the other hand, write-offs occur when a portion of the total outstanding remains unpaid, and you know that the client will be unable to pay while applying a payment.
Note: It's important to note that whether you issue a credit note or a write-off, the accounting treatment remains the same: it's recorded as a Credit Note with a unique identifier and essential details such as the date, customer information, and reason for issuance.
Steps to Apply a Credit Note/Write-Off
Open the
Billingsection from the left menu, and click on theInvoice Numberto open the relevant invoice.Click on
More Actionson the top, and selectAdd a Credit Note (Write-Off).You will immediately notice the entire outstanding amount in the
Amountsection. Just addCredit Note Reason&Internal Note(if applicable).
Finally, click on the
Savebutton.The credited amount will automatically be applied to the invoice, reducing the client's total outstanding balance.
Apply a Write-off while Applying a Payment
Follow all the above steps until
More Actions.Choose
Add a Payment, and enter the payment amount in theAmountsection.Click on the toggle named
Enable Write-Offson the right side to apply the write-off amount.
Add the
Write-Off Amount,Credit Note Reasonto the pop-up window. You can also add an internal note for future reference.
Once added, click on the
Savebutton.Once saved, the write-off will be deducted from the total outstanding balance on the payment page.
Now, add the payment details and click on the
Add Paymentbutton. Make sure that you follow this step. Otherwise, the Write-off will not be applied.
You can also apply a 100% discount in the total discount field while creating an invoice or editing an existing one.
It's worth noting that whether you issue a credit note for the remaining amount or apply a write-off, the invoice's final status will be marked as paid if the client has already settled the remaining balance.