Credits & Credit Memos

Credits in SettleWise represent money or value owed to a customer. They come from overpayments, cancellations, transfers between customers, or manual adjustments, and can be applied to future invoices automatically.

How Credits Are Created

Credits are created in three ways:

Type	Created when	How it works in QuickBooks
Overpayment credit	A payment exceeds the total amount owed across all allocated invoices	Stored as `unapplied amount` on the Payment — no separate document
Credit memo	You process a rollover, refund, write-off, or courtesy adjustment	Created as a separate CreditMemo document
Transferred credit	You move available credit from one customer to another from the customer profile	SettleWise-only in v1 — no QuickBooks sync, no QB CreditMemo, and no customer-credit move in QB

All three result in available credit on the customer's account, but they behave differently in QuickBooks. Overpayment credits are tied to the original payment, credit memos are standalone documents, and transferred credit stays inside SettleWise in v1, so it will not be reflected on either customer's QuickBooks balance.

Credit Operations

Situation	Operation	Money returns?	Credit created?	What happens
Customer cancelled, wants money back	Refund	Yes	No	Credit memo created → RefundReceipt issued in QB → money returned to customer
Customer cancelled, keep deposit for next season	Rollover	No	Yes	Credit memo created → credit available for future invoices
Customer A has available credit, Customer B should use it	Transfer Credit	No	Yes (on target)	Source credits are consumed FIFO and a new available credit is created on the destination customer
Small remaining balance, not worth collecting	Write-off	No	No	Credit memo closes the balance without creating usable credit
Customer has credit, new invoice created	Apply Credit	No	N/A (consumed)	Existing credits consumed FIFO, oldest credit first

Transfer Credit vs Balance Transfer

These are different workflows:

Workflow	Use it when	Result	QuickBooks
Transfer Credit	A customer already has available credit and another customer should own it	Source credit is consumed FIFO, a new available credit is created on the destination customer, and both customer profiles show transfer history	No sync in v1 — not reflected in QB on either customer
Balance Transfer	Another customer should take over an unpaid invoice balance	Source invoice is closed with a write-off credit memo and a new invoice is created for the destination customer	Yes

Use Transfer Credit when credit already exists. Use Transfer Balance when you're moving debt.

How Partially Paid Invoices Are Handled

When you rollover or refund an invoice that has partial payments, the system creates two credit memos automatically:

Rollover/Refund credit memo — for the amount already paid (creates credit or refund)
Write-off credit memo — for the remaining unpaid balance (closes it without creating credit)

The original invoice stays as paid — it is never voided. The service status is set to refunded (for refunds) or credit issued (for rollovers and write-offs) to reflect what happened while preserving the full payment history.

Example: Invoice for $1,000, customer paid $600 deposit, then cancelled.

Rollover: $600 credit memo (available credit) + $400 write-off
Refund: $600 refund receipt (money returned) + $400 write-off

Paid invoices are never voided in SettleWise. Credit memos are used instead to maintain the complete audit trail of what was paid and what happened after.

How Credits Are Applied (FIFO)

When credits are applied to invoices — either automatically when processing a payment or via a credit-only payment:

Credits consumed oldest first — sorted by creation date
Invoices filled oldest first — sorted by due date
Credits applied before cash — in a combined payment, credits are consumed first
Sequential fill — one invoice is completed fully before moving to the next
Multiple credits can combine — if a customer has several small credits, they're combined to cover an invoice

Viewing Credits

From the customer profile

Open a customer's profile to see their credit balance:

Available credits — sum of unused credits
Outstanding debt — sum of unpaid invoice amounts
Net balance — credits minus debt (positive = customer has credit, negative = customer owes)

From the Credits page

Navigate to Credits in the sidebar to see all credit memos across customers, with type, amount, and status.

Credit Statuses

Status	Meaning
Available	Full credit amount is unused and can be applied to invoices
Partially Applied	Some credit has been used, remainder still available
Fully Applied	Entire credit has been consumed
Expired	Credit has passed its expiration date (if set)

Best Practices

Apply credits promptly — don't let credits accumulate; apply them when creating new invoices to keep balances clean
Communicate rollovers clearly — confirm with the customer that they prefer credit over a refund before processing
Review credits at end of season — decide whether to keep, refund, or transfer outstanding credits before closing
Use credit transfers sparingly — only move credit between customers with a clear relationship (family, same organization)
Use balance transfer for unpaid invoices — if you're moving open debt, use Transfer Balance instead of Transfer Credit
Check net balance before invoicing — if a customer has significant credit, applying it to the new invoice avoids confusion

Credits & Credit Memos

How Credits Are Created

Credit Operations

Transfer Credit vs Balance Transfer

How Partially Paid Invoices Are Handled

How Credits Are Applied (FIFO)

Viewing Credits

From the customer profile

From the Credits page

Credit Statuses

Best Practices

Related

Create a Credit Memo

Cancel and Refund

Rollover Credit

Apply Credit

Transfer Credit

Credit Operations with AI

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