Credit Memos

A credit memo holds money you owe an account until it's spent on another invoice or given back. You'll find them under Billing → Credit Memos.

There are two types:

Type	Use it when	What it does to your books
Overpayment	An invoice received more than its total, like a check for $1,100 on a $1,000 invoice.	Nothing to income or sales tax. The extra cash becomes credit.
Adjustment	You're crediting the account for a reason: a billing error, an early return, a courtesy discount.	Takes the credit off your income and sales tax.

Either way, the account sees Unused Credit that it can spend on any of its invoices.

Issue a credit memo

Click New Credit Memo on the Credit Memos list, or Add New → Credit Memo at the top of the Dashboard. Choose the account, then the type.

You can also start one from where you are. These fill in the account and the invoice for you:

• An overpaid invoice shows a warning: This invoice is overpaid by $100. Issue a credit memo to hold it for the account, or refund it from its payments. Click Issue a credit memo.
• When you log a payment that's more than an invoice's balance, Propcart asks Issue a credit memo?
• On an invoice, Menu → Issue Credit Memo. An overpaid invoice starts an Overpayment; any other starts an Adjustment for that invoice.
• On an account, Menu → New Credit Memo.

Overpayment

Choose the Overpaid Invoice. The Amount starts at all of its overpayment; you can hold less. Issuing all of it pays the invoice in full, so an Open or Overdue invoice turns Paid.

Only the cash an invoice received can become credit. A write-off, or credit from another memo, can't.

Adjustment

Enter the Amount of credit, including tax, and the Reason. The reason is required, and it's printed on the credit memo.

• With an invoice: choose the Invoice the credit is for. The tax comes off in proportion to that invoice's tax. The invoice itself doesn't change, even if it's Paid. All the adjustments on one invoice can't add up to more than its total.
• Without an invoice: choose the Tax Region. It starts at the account's region. Choose No tax for credit with no tax in it.

Under the amount, Propcart shows the tax it includes, like Includes $17.35 tax at Los Angeles 9.5%.

Click Issue Credit Memo. Credit memos are numbered from #1000, separately from your invoices.

Spend credit on an invoice

Credit can pay any invoice of the same account and business entity that has a balance due.

• From the invoice: in its payments, click Apply Credit ($40 unused), choose the credit memo, then the date and amount.
• From the credit memo: Menu → Apply to Invoice, then choose the invoice.

The amount starts at the most it can be: the credit left, or the invoice's balance, whichever is less. The payment shows on the invoice as Credit Memo #1002. If credit pays a Draft invoice in full, Propcart asks whether to set it to Paid, as it does when you log a payment.

Give credit back as cash

To refund unused credit, first put it back on an invoice that holds the cash, then refund it there.

1. On the credit memo, click Menu → Return Unused Credit.
2. Choose the invoice. Propcart lists the account's paid invoices, the one the credit came from first, each with the most it can take. You can only return credit to an invoice that received at least that much cash.
3. Click Return Credit. The invoice is now overpaid by that amount, and stays Paid.
4. Open the invoice and refund the overpayment from its payments, as usual.

Undo a credit memo

• Remove applied or returned credit: on the invoice, click Remove on the credit payment. The credit goes back on the memo. You can't remove returned credit that's already been refunded.
• Void a credit memo: Menu → Void Credit Memo. You can only void a memo that hasn't been applied or returned; remove those first. Voiding puts an Overpayment's credit back on its invoice as an overpayment. The memo keeps its number, marked Void.

You can't edit a credit payment, only remove it. On the credit memo itself you can change its Reason, Memo and Private Notes.

Where unused credit shows

• The account: its summary shows Unused Credit under its balance.
• Statements: an account's statement lists its unused credit and shows Net Due: its balance due, less its unused credit.
• Accounts Receivable Aging Summary: each credit memo's unused credit is a negative line in its account, aged from the date it was issued.

Download, email and export

• Download or Email a credit memo from its Menu. The PDF shows its rows (issued, applied and returned), its unused credit, and an Adjustment's subtotal and tax. Private notes are never printed.
• To export your credit memos to a spreadsheet, click the arrow next to New Credit Memo, then Export Spreadsheet. It uses the list's filters.

Bank deposits

When a bank deposit received more than you applied to its invoices, Propcart asks what to do with the difference:

• Hold as Credit adds it to one of the deposit's invoices, leaving that invoice overpaid. After saving, Propcart offers to issue a credit memo for it.
• Save Unapplied saves the deposit with the difference not applied to any invoice.

See Bank Deposits.

Reports and QuickBooks

• QuickBooks Journal Entry: credit memo payments post to your Customer credits account, a liability that always equals your accounts' unused credit. Map it the first time a month has credit memo entries.
• Sales Summary and Sales Tax Summary, accrual basis: each Adjustment issued in the period is a negative line, so your sales and sales tax are net of the credit you gave.
• Cash basis reports count each credit memo payment in the month of its date, with its own share of the invoice's tax, like any other payment. An Adjustment's credit comes off in the month it's issued.

Things to know

• Same account, same business entity. Credit is only spent on, or returned to, invoices of the account it belongs to, under the same business entity.
• Changing an account or business entity. An invoice with credit on it can't move to another account or business entity. Remove the credit first.
• Deleting an account. An account with unused credit can't be deleted. Apply or return the credit, or void the memo, first.
• Dates. Credit can't be applied or returned before the date its memo was issued.
• When an Overpayment's cash goes away. If the payment behind an Overpayment is deleted or charged back, its invoice has a balance due again, and the credit can't be spent until that's settled. Void the memo, or settle the invoice.
• GetSet invoices. Credit works on invoices you collect yourself. An invoice GetSet charged by card can have an Adjustment, but credit can't be applied or returned to it.
• Permissions. Issuing, applying and returning credit need Create payments. Removing credit and voiding need Delete payments. Emailing and editing a memo's words need Edit payments.

caution

This is not tax advice. Please confirm with your accountant how your credit memos should be booked.