Credits & Credit Memos
Understanding customer credits and how to manage them
Credits in SettleWise represent money or value owed to a customer. They come from overpayments, cancellations, or manual adjustments, and can be applied to future invoices automatically.
How Credits Are Created
Credits are created in two ways:
| Type | Created when | How it works in QuickBooks |
|---|---|---|
| Overpayment credit | A payment exceeds the total amount owed across all allocated invoices | Stored as UnappliedAmt on the Payment — no separate document |
| Credit memo | You process a rollover, refund, write-off, or balance transfer (via AI or manual) | Created as a separate CreditMemo document |
Both types 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.
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 |
| Move balance from Customer A to Customer B | Balance Transfer | No | Yes (on target) | Write-off on source invoice → new invoice for target customer with transferred amount |
| 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 |
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 serviceStatus is set to cancelled to indicate the service was cancelled 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
createdAtdate - 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 balance transfers sparingly — only transfer between customers with a clear relationship (family, same organization)
- Check net balance before invoicing — if a customer has significant credit, applying it to the new invoice avoids confusion
Related
Create a Credit Memo
Issue a credit memo and create a traceable invoice from it
Cancel and Refund
Process a cancellation with refund
Rollover Credit
Keep deposit for next season
Apply Credit
Use credit on a new invoice
Transfer Balance
Move balance to another customer
Credit Operations with AI
Process credits using natural language