What Are Credit Notes?

Modified on Fri, 19 Aug, 2022 at 11:46 AM

Credit Notes are generated when invoiced services are cancelled, or have a reduced value. Credit notes are mostly used when you Invoice in advance of service delivery. They help you easily manage a client's account balance by allowing you to Credit a client for a walk they cancel, instead of having to create a refund or manage their balance in another way. There is also a system for Debit Notes.


Tip: When you cancel invoiced services:
  • A credit note associated with the original invoice is created.
  • Credit notes can have additional cancelled services added to the same credit note until it is committed.
  • Credit notes can be committed from the Service Order, Invoice, or Credit/Debit Notes Report.


When is it Appropriate to Create a Credit Note?

Credit notes are most often used when clients are invoiced in advance of service delivery.

For example, a client receives walks every weekday and they are invoiced monthly on the 1st of the month. The client cancels 5 dog walks during the month. So your workflow would be as follows:
  • Client Invoiced on the 1st of the month.
  • Payment received on the 5th of the month.
  • Client cancels a service, creating a credit note which remains open until it is committed (applied).
  • Client cancels additional services during the month, the credits are added to the same uncommitted credit note created above.
  • At the end of the month, before creating the invoice for next month, commit or "apply" the credit note to their account from the service order or from the Credit/Debit notes report.
  • When the Invoice is created, it reflects the total amount for the upcoming services (say $300), but the client's account shows the amount of the Credit ($120), so the balance due is $180.


When is it NOT Appropriate to Generate a Credit Note?

Creating a credit note may not be appropriate if your client books services occasionally, such as annual vacations.

For example, a client books 7 vacation visits, you invoice them, but they have not paid. They cancel one and now only need 6 visits. You want to send them a new invoice for 6 services, so you would:

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