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 come into play when a portion of the total outstanding remains unpaid.
Note: It's important to note that regardless of whether you're issuing a credit note or a write-off, the accounting treatment remains the same: it's recorded as a "Credit Note" with a unique identifier, along with essential details such as date, customer information, and reason for issuance.
Here's how to apply a Credit Note:
Open the relevant invoice.
Click on "More Actions."
Select "Add a Credit Note."
Enter the amount and reason for the credit note, and save the changes.
The credited amount will automatically be applied to the invoice, reducing the total outstanding balance for the client.
To apply a write-off:
Open the invoice in question.
Click on "More Actions."
Choose "Add a Payment."
Enter the payment amount.
If the payment amount is less than the total outstanding balance, you'll see an option to write off the remaining amount at the bottom.
Select this option and apply it to the invoice.
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.