Auto Create and Allocate a Credit Note
When an Invoice is placed into refund mode (i.e. the invoice has been overpaid or the hire ended early etc.), you will see a "Create/Link Credit" option under the Options button. This will allow you to generate and link a Credit Note automatically to offset it against another Invoice — with both documents linked together for clear tracking and audit history. You can then allocate the credit via the Apply Credit button on an invoice with an outstanding balance making the process faster, clearer and more intuitive.
For the automated process to work you'll need to create and configure a Credit Note item placeholder item for holding the overpayment amount on the invoice and credit note.
Create a Credit Note item placeholder item
Navigate to Setup > Items and select the + New Item button. Enter the required non-stock item placeholder item fields i.e.
Description = "Credit Note Item"
Code = "Credit Note"
Item Type = "Misc"
In the Configuration section check the Non-Stock box.
In the Hire Rates / Sell Prices tab set an Each value of 0.00
Save the new Credit Note Item.
Navigate to Setup > Preferences > Sales, in the "Credit Note Item:" field, select the Credit Note Item placeholder from the list of non-stock items and Save.
Automatically create a Credit Note
If an invoice is in refund mode but you want to create a credit note instead of refunding the customer, select the "Create/Link Credit" option from the Options button. This will automatically create a new credit note record for the overpaid amount to review and then save.
On the Credit Note, using the placeholder item, an Item line is created for the amount that invoice was is in credit (as a negative value). An item message is also added to note the invoice number that the credit note was raised to offset.
On the invoice the credit note was raised from, an item line is added to balance the invoice Total Balance back to 0.00 for the amount that it was previously in credit. An item message is added to note the credit note number created.
Pay Outstanding Invoices with a Credit Note
When an Invoice has a balance owing (greater than $0.00), a new "Apply Credit" button will appear directly under the Balance Due section (provided the customer has available Credit Notes or other Invoices in credit to allocate). This option only appears when there is actually credit available to apply;
On the invoice, select "Apply Credit", the Receive Payments screen opens.
Select the check box next to the credit note you wish to apply
Select the check box next to the outstanding invoice you wish to pay down. Then adjust the Applied column balance to take the required credit note amount from the total amount on the invoice. i.e.
If the credit note value is less that of the invoice, i.e. Credit note value = -50.00 and Invoice total = 200.00, after adjustment the Invoice total = 150.00.
If the credit note value exceeds that of the invoice, set the Applied column total of the Invoice total = 0.00 to pay it in full (the credit note value will adjust its balance for the amount allocated post save).
Select Save New to apply the credit note balance to the selected invoice.
Configuration and use of the Credit Note item placeholder item and the Create/Link Credit and Apply Credit options will make the process of creating and allocating credit notes faster, clearer and more intuitive.