Customer Credits & Credit Memos

Issue a credit when a customer returns goods, gets billed incorrectly, or is owed a goodwill adjustment. BizBooks Pro records the accounting for you and lets you apply the credit against any open invoice.

Issuing a Credit Memo

A customer credit records money you owe a customer, rather than money they owe you. Common reasons to raise one:

• The customer returned merchandise
• An invoice was raised for the wrong amount
• You agreed a discount or allowance after invoicing
• Goods arrived damaged and you credited the customer instead of reshipping
• You want to give a goodwill credit after a service problem

To issue one:

1. Go to Customers → Credits from the sidebar
2. Pick the customer from the selector at the top
3. Click Create Credit Memo
4. Enter the Amount and the Credit Date
5. Choose a Reason Code — this decides which income account the credit lands in (see below)
6. Type a short Reason describing what happened; this is required and shows on the credits list
7. Optionally pick an invoice to apply the credit to straight away, or leave it as Hold for later
8. Click Save

The credit is numbered automatically in a CM- series and appears immediately in the customer's available credit balance.

What Posts to Your Books

The moment a credit memo is saved, BizBooks Pro writes the matching double-entry journal entry — you do not have to record anything by hand:

Accounts receivable comes down by the amount of the credit, and the offsetting debit sits in a contra-revenue account so it nets against sales on your income statement. Your A/R control account therefore always agrees with the balances shown on your customer list.

Reason Codes & Accounts

A returned product and a goodwill gesture are different events, and lumping them into one line on the income statement hides useful information. The reason code you pick decides where the debit goes:

If neither account exists in your chart of accounts yet, BizBooks Pro creates it for you as a contra-revenue account the first time it is needed. Nothing to set up in advance.

Sales Tax on a Credit

If the customer paid sales tax on what they are being credited for, the credit has to give that tax back too — otherwise your tax liability stays overstated and the sale is never fully reversed.

Pick a Sales Tax Code on the credit memo form, normally the same code that was on the original invoice. The Credit Amount you enter is the amount before tax; BizBooks Pro adds the tax on top and shows you the running Total Credit as you type.

The journal entry splits accordingly:

Multi-component codes unwind into their own liability accounts rather than collapsing into one lump, so a British Columbia credit reverses GST and PST separately, exactly as the invoice charged them.

Leave the tax code on None for a credit where no tax was charged — a goodwill gesture, for instance. Accounts receivable then moves by the amount you typed, which is how credits behaved before tax support was added.

Returned Items & Stock

A credit can list the actual items that came back, not just a total. Add a line for each returned product and BizBooks Pro will put the stock back on the shelf and take the cost of those goods back out of cost of goods sold.

For each line you set:

• Product — pick the tracked item that was returned
• Quantity and Unit price — what is being credited
• Restore to inventory — leave it on for goods you can resell, turn it off for anything that came back damaged and is being written off

When a credit has lines, the lines determine its value — you do not enter a separate total that could disagree with them.

Credits without lines still work exactly as before. A billing correction or a goodwill credit has no item behind it, so there is nothing to put back and nothing to list.

Applying Credits to Invoices

An available credit can be applied to any open invoice for that customer:

1. Go to Customers → Credits and select the customer
2. Find the credit in the list and click Apply
3. Choose the unpaid invoice from the dropdown
4. Enter the amount to apply — the full credit, or part of it
5. Click Apply Credit

The invoice's balance due falls by the applied amount, and its status moves to Partial or Paid accordingly. The credit's available balance drops by the same amount, and any remainder stays on the customer's account for next time.

Example

A customer returns $150 of goods and has two open invoices:

Viewing Available Credits

The credits screen lists every credit with an available balance for the selected customer, showing the credit number, date, reason, original amount and the amount still available. A running Total Available Credit for that customer is shown underneath.

Unapplied credits are also netted off what the customer owes in your customer list, so a customer sitting on a large open credit never looks like they owe more than they do.

Voiding a Credit

If a credit was raised in error — wrong customer, wrong amount, duplicate — click Void next to it on the credits list. You will be asked to confirm and can record a reason.

Voiding is a full reversal, and it works even on a credit that has already been partly spent. BizBooks Pro will:

• Post a reversing journal entry that backs out the original one line for line — including the tax lines, if the credit carried tax
• Undo every application, restoring the balance due on each invoice the credit had been applied to
• Take any stock the credit put back on the shelf off again, because a voided return did not happen
• Remove the still-unapplied portion from the customer's credit balance
• Keep the credit on record, marked as voided with its reason and its reversing entry

Credits are voided rather than deleted on purpose. The document and its reversal both stay in the audit trail, so anyone reviewing the account later can see exactly why the customer's balance moved twice.

Overpayment Credits

Credits also appear automatically when a customer pays more than they owe. These are numbered in a CRD- series and behave the same way — they sit on the customer's account and can be applied to future invoices.

An overpayment credit cannot be voided from the credits screen, because the customer really did send that money and the payment record says so. To reverse one, void the underlying payment instead: Customers → Payments, find the payment, and void it there.