How Do I Generate a Credit and 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 can 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:

Phase 1: Create a Fee

1. Navigate to Client Accounts (Location or Service Fees can also generate credits)

Go to Client Accounts in the main navigation and open the client account you want to credit.

2. Add a New Client Account Fee

Scroll down to the Client Account Fees section and click New Fee.

3. Fill in the Fee Form

Complete the form with the following settings:

• Line Item Category — Select Other
• Amount — Enter a negative value (e.g., -250.00  )
• Header Label — Enter the label that will appear as the section header on the invoice (e.g., Credit Memo  )
• Label — Enter the line item description (e.g., Credit Memo  )
• Billing Style — Fixed
• Frequency — One Time
• Start Date — Set to the first day of the fiscal period the credit should appear in

Click Save to create the fee.

Phase 2: Verify in Billable Revenue

4. Open the Revenue Dashboard

Navigate to Revenue in the main navigation and select Billable Revenue. Use the fiscal period selector to navigate to the period that matches the fee's start date.

5. Confirm the Fee Appears

Click the Client Account Fees tab to verify the fee is listed for the correct client account with the correct negative amount.

Phase 3: Generate the Invoice and Convert to a Credit Memo

6. Generate a Client Invoice

From the Billable Revenue dashboard, generate an invoice for the client. The negative fee will be included as a line item.

7. Open the Invoice

Navigate to Revenue > Invoices, find the newly created invoice, and open it.

8. Click the + Button on the Negative Line Item

Scroll to the Line Items section of the invoice. Locate the negative Credit Memo line item. Click the + icon to the right of it.

9. Select "New Credit Memo" and Move the Line Item

In the modal that appears, confirm New Credit Memo is selected in the dropdown, then click Move Line Item.

Discovery will create a new Credit Memo document and redirect you to it.

Phase 4: Apply the Credit Memo to an Invoice

10. Review the Credit Memo

You are now on the Credit Memo record. Review the Credit Memo Information section to confirm the document number, client account, and total amount are correct.

11. Fill in the "Applied to Invoices" Form

Scroll down to the Applied to Invoices section. Enter the following in the input row at the bottom of the table:

• Invoice # — The number of the invoice you want to apply this credit to
• Applied Amount — Enter a positive value for the amount to apply (e.g., 250  )
• Applied Date — The date the credit is being applied

Click the + button to save the application.

12. Confirm the Credit Was Recorded

After saving, the Applied to Invoices table will show the invoice number, applied amount, and date. The Applied Amount in the Credit Memo Information section will update to reflect the total applied.

13. Verify on the Target Invoice

Navigate to the invoice you applied the credit to. In the Invoice Information section, confirm:

• Total Credit Memos Applied shows the credited amount
• Total Due has been reduced accordingly
• The Applied Payments/Credit Memos sidebar shows the credit memo entry

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.