Applying Credits to Invoices

Overview

Client credits represent overpayments, advance payments, or deposits that can be applied toward future invoices. Using credits ensures that your customer account balances remain accurate, speeds up collections, and helps you avoid issuing unnecessary refunds.

Whether a client overpays or prepays, Quicken Business & Personal makes it easy to apply those credits directly to open invoices.

✅ Why It Matters

Benefit	Description
Accurate Client Balances	Keeps account records clean by properly offsetting overpaid or prepaid amounts.
Faster Payments	Speeds up the payment process by reducing the amount clients need to pay on new invoices.
Improved Professionalism	Builds trust with clients by ensuring every dollar they pay is tracked and applied.
Fewer Refunds	Applying credits is simpler than processing refunds and keeps cash flow healthy.
Simplified Bookkeeping	Allocates payments across periods or invoices without needing to manually adjust totals.

🔁 Common Credit Scenarios

Client Overpayment
A customer pays $600 for a $500 invoice. The $100 credit can be applied to a future invoice.
Advance Payment
A client pays $1,000 upfront for ongoing consulting. You apply this credit to future invoices as services are delivered.
Deposit Application
You collect a $300 deposit. When the final $800 invoice is ready, apply the $300 credit so the client only owes $500.
Cancelled Service
If a client cancels a prepaid service, their unused portion becomes a credit for future use.

🛠️ How to Apply a Credit

To apply a client credit:

Go to Invoices
Find the invoice, click the three dots → Apply Payment → Use Existing Credit (available credit(s) will be shown)
Enter the amount to apply to invoice and click Save

💡 Client credits are managed in the Clients & Projects section and can be applied in full or in part to any open invoice.

🔎 Where to Check Client Credit Balances

To check client credit balances, go to the Clients & Projects section to view each client's available credit.

📌 Important Rules About Credits

Rule	Details
No Overpayments	You can’t apply more credit than the invoice amount. Extra credit remains for future use.
Partial Credit Use	Apply part of a client’s credit and save the rest.
Multiple Credits Allowed	Combine various credit sources up to the total amount due.

📘 Best Practices

Apply Credits Promptly: Use available credits as soon as an invoice is created to reduce owed balances.
Communicate Clearly: Let clients know when you’ve applied a credit so they aren’t confused by the adjusted total.
Track Credit Origins: Note whether a credit came from a deposit, prepayment, or overpayment for cleaner records.
Review Old Credits: Periodically check for unused credits and follow up with clients or issue refunds per policy.

💬 Example: Applying a Project Deposit

Scenario: You receive a $500 deposit from Fancy Florals for a website project totaling $2,000.

Steps:

Create the $2,000 final invoice
Apply the $500 deposit credit
Invoice now shows a $1,500 balance
ABC only pays the remaining $1,500

Result: Clean books, happy client, and no refund needed.

🛠️ Troubleshooting Tips

Issue	Try This
Credit Not Available	Check the payment record to confirm it was marked as a credit and not applied to an invoice.
Wrong Amount Applied	Edit or undo the credit application and reapply the correct amount.
Invoice Shows Full Balance	You may have saved but not applied the credit—verify the credit amount was entered and saved.

🤔 When to Use Credits vs. Refunds

Use Credits When	Process Refunds When
Ongoing relationship with the client	Client requests their money back
Small credit amounts	Client won’t be invoiced again
Easier than processing a refund	Company policy requires refunds