After creating a credit note, you can configure the system to automatically apply it to new invoices. The same applies to prepaid balances. Here's how you can enable these options:
Step 1. Enabling Automatic Application of Credit Notes and Prepaid Balances
To set this up, follow these steps:
Go to Settings > Billing.
Under the Invoice Generation section, scroll down to the options:
Automatically use credit notes to pay invoices
Automatically use prepaid balance to pay invoices
Simply toggle on the options you want to enable.
Step 2. Understanding How the System Applies Payments
If both options are enabled, the system will prioritize the use of credit notes first, followed by prepaid balances. Here’s how it works:
When a new invoice is generated, the system will first check for any available credit notes and apply them.
If there is still an outstanding amount after applying the credit note, the system will then apply any available prepaid balance.
If neither of these cover the full amount or if there are no credit notes or prepaid balance, the system will charge the primary payment method (if auto-charge is enabled).
Step 3. Confirming the Credit Note status
The credit note must be in open status to be applied to an invoice. If it is in paid status, it will not be applied.
For more information about creating a credit note, you can refer to this article.
Step 4. Setting a Specific Billing Date for Credit Notes
You can specify the month in which a credit note should be applied. To do this:
Go to the credit note section.
Locate the credit note desired, click the three dots next to it and select Back to Draft.
Once in draft status, click the three dots again and select Change Billing Date.
Set a new billing date according to your billing cycle.
For example, if your billing cycle starts on the 1st of each month and you want the credit note to be applied to November's invoice, you can set the billing date to any day between October 2nd and November 1st. This ensures that the credit note will be applied to the next invoice.