Credit Memos¶
A credit memo is credit a customer holds with you. It moves no money on its own: you issue it, and later apply it to reduce or clear an invoice. Void an unapplied credit memo to cancel its available balance.
There are two places to apply it. From an invoice, using Settle With Credit Memos, when the invoice already exists and no new payment is being taken. Or from the Charge screen, using the Apply Credit Memos button, when you want the credit to reduce what the customer pays in the same action as the payment. Apply a credit memo covers both.
| Page | What it covers |
|---|---|
| Issue a credit memo | Creating credit against a customer, from an invoice |
| Apply a credit memo | Using it to reduce or clear what is owed |
| Email a credit memo | Sending it to the customer |
| Void a credit memo | Cancelling unused credit |
Credit memos sit alongside net terms, late fees and surcharging. See your account team if a screen described here is not available in your org.
Credit Memo or Refund?¶
A refund returns money to the customer's card or bank account. A credit memo does not: it records that you owe them value, to be used against a future payment. If the customer wants their money back, refund them instead.
Status¶
| Status | What it means |
|---|---|
| Draft | An advance payment whose gateway result has not settled yet. It becomes Open and spendable as soon as it does. Credit memos you issue by hand are Open immediately |
| Open | Issued, with the full amount still available to apply |
| Partially Applied | Some of the amount has been applied; some is still available |
| Fully Applied | The whole amount has been applied. Nothing left to use |
| Written Off | Created by closing out an invoice as bad debt. Terminal: never reverts, even if the invoice's numbers change afterwards |
| Voided | The unused balance was cancelled. See void a credit memo for what this does and does not undo |
| Expired | Passed its expiry date before it was fully used, if your admin set one and scheduled the expiry job |
The Order Credit Is Applied In¶
When ChargeOn chooses which of a customer's credit memos to use, for example sweeping available credit onto an installment plan's or subscription's next invoice automatically, it works through them in a fixed order:
-
Soonest to expire first. A credit memo with an expiry date always goes before one without, and the nearer expiry date goes first.
-
Then by the date the credit was issued, earliest first.
- Then by which one was created first, if the first two are tied.
The idea is that credit close to expiring gets used before it lapses. When you apply credit yourself (see apply a credit memo), the picker lists available credit in this same order, but you can choose any credit memo on the list, in any order and for any amount up to what is available.
Advance Payments¶
Money a customer pays before there is an invoice to put it against (cash, a cheque, a wire, or a card charged up front) is recorded as an Advance Payment credit memo. It is not tied to any invoice at the moment it is created.
Choose how to apply advance credit
Apply a credit memo to the invoice you want to settle. For an installment plan or subscription, turn on Auto Apply on Recurring when you record or charge the advance payment to apply it automatically to that plan’s future cycle invoices. The setting is off by default.
See advance payments for how to record or charge one.