How Do I Create a Credit or Refund for an Invoice?

There are many reasons in the business world for why you may need to issue a credit to a customer's invoice.  Perhaps the invoice was created incorrectly, or perhaps something they were charged for needed to be returned.  Either way, creating credits for your invoices makes returning money or waiving part (or all) of an invoice is easy.

Start by recalling the invoice.  This can be done by looking up the customer in the Customer Center or by locating the invoice itself in the Invoice List.  With the invoice open in the Sales Invoicing screen, head to the Activities menu and select Create Credit Memo.  The entire invoice will be carried over to the Credit Memo screen.

The Credit Memo screen is nearly identical to the Sales Invoicing screen.  But instead of being used to bill the customer and remove items from inventory, it is used to credit your customers and can be used to return items to your stock.  When you create a credit memo from an invoice, you'll see all of the line items from the invoice carried onto the credit memo.  

If you are crediting the entire invoice, you'll simply add any necessary notes to your credit memo and then click Save.  If you are crediting only part of the invoice, you'll remove the items you are not crediting from the credit memo, add any necessary notes and then click Save.  Line items can be removed from the body of the credit memo by clicking on the item once and then hitting the Delete key on your keyboard.

BEFORE:

AFTER:

Refunds

If you are issuing a refund to a customer for an invoice they have already paid, you'll click the Tender button on the Credit Memo screen to record the payment returned to the customer.  Note: If you are integrated with a third-party accounting system, do not issue a refund in ESC.  Instead, you will need to post the credit memo to your accounting system the same way you would a normal invoice and then issue the refund from that system.

Reconcile the Credit Memo with the Invoice

If the invoice has not yet been paid, then you will use the Credit Memo to reduce the amount owed by the customer, rather than refunding money.  The Payments screen is used to reconcile a credit memo with its related invoice. 

  1. Head to Receivables → Enter Payments.
  2. In the Customer field, type the customer's name or use the down arrow to open the Customer Search screen to select your customer.  When the customer is selected, both the invoice and the credit memo should appear in the list of transactions below.
  3. Select Credit as your Payment Method.
  4. Click the Pay button next to the Credit Memo in the list. 
  5. Now click the Pay button next to the invoice you wish to tie the credit to.
  6. Click Save.  

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