How Do I Apply a Credit Memo?

Credit Memos operate similarly to Client Payments, reducing the outstanding amount on an invoice. However, the process to issue a Credit Memo differs.

A Credit Memo must originate as a negative Fee Line Item. This is very important. There are a few methods to accomplish this, but in most cases we suggest establishing a one-time Client Account fee that can be converted into a Credit Memo later on.

To issue a Credit Memo, please follow these steps:

Click on Invoicing.
Click on Client Accounts.
Use the search and filter option to find the Client Account that requires the Credit Memo.
Click on View.
Scroll down to the Client Account Fees section. Here will be listed any existing Client Account Fees.
To create a new Client Account Fee, click on the New Fee button.
Choose a Line Item Category. Here we chose Other.
Select Fixed as the Billing Style.
Enter a negative Amount for the Credit Memo. It is pivotal that the amount here be a negative.
Update the Header Label if preferred.
Update the Label if preferred.
Select One Time from the Frequency drop-down menu.
Provide a Start Date. Choose a date in a Fiscal Period where you would like the Credit Memo to appear on a Client Invoice.
Click Save.
This new Fee should now be visible under Client Account Fees on the Client Account detail page. Next, we need ensure this Client Account Fee is appearing in the correct Fiscal Period on the Billable Revenue dashboard. Click on Invoicing.
Click on Revenue.
Click on the Billable Revenue tab if you're not already there.
Select the Fiscal Period that includes the Client Service Fee's Start Date you chose earlier. You should now see your Client Account fee included in the Client Account Fees category.

Note: Your target fee may be one of many in this Fiscal Period. To ensure your fee is included in the Client Account Fees total, click on the View all link.

To move this fee to a Client Invoice, click the Generate Client Invoices button.
Click on the Invoices tab.
Next we'll need to locate the Invoice where the Client Account Fee appears as a line item. We know the Client Account and we also know the Invoice Date month (September 2023). Filtering by Client Account yields one Client Invoice for September 2023. Click on View.
Scroll down to the Line Items section. The negative fee line item should be under the No Location sub-section.
Click on the + button.

This action begins the process of converting a negative fee Line Item into a Credit Memo.

In the lightbox that appears, select New Credit Memo if it's not already selected.
Click on the Move Line Item button. You should now see an Edit page for a new Client Credit Memo.
In the Amounts Applied To Invoices section, we now need to decide what Client Invoice(s) this Credit Memo needs to be applied to. Currently there are no applications of Credit Memo amounts.
In the Client Invoice Number field, provide the Client Invoice number where you'd like to see this Credit Memo applied. In this example, I'd like to see the Credit Memo on the 09/01 Client Invoice (121811) where this previously appeared as a Client Account Fee line item.
Provide an Applied Amount. Here we want all of the available Credit Memo amount to be applied to a single invoice. Here, we entered 250. Since this is now designated as a credit, we only need the amount (not a negative amount).

Note: You could decide to split this Credit Memo amount across multiple Client Invoices. Just add additional Amount Applied records in this section until the full Credit Memo amount is consumed.

Keep the Applied Date to record today as the day this Credit Memo was applied or change it if preferred.
Click the blue + button to save the Amount Applied record. Saved Amount Applied records will have a red X button to remove later if necessary.
To see this Credit Memo on the Client Invoice, click the blue invoice number on the saved Amount Applied record. Here, you'll see the Applied Payment/Credit Memos section reflects the Credit Memo you just applied. Also, the Total Due amount has been reduced by the amount of the Credit Memo (as compared to the Total Billed).
To see how the Credit Memo appears on the actual Client Invoice emailed to your Client Company, click on the PDF icon button at the top of the page. On the Client Invoice, the Credit Memo appears at the bottom in between Current Invoice Total and Total Due.

If you have additional questions or need more in depth information, please feel free to send us a message using the help beacon in the lower right-hand corner.