Overview

<aside> 💡 Credit Notes in Subscript Billing are supported for Xero and Quickbooks Online (QBO).

</aside>

Credit Notes in Subscript Billing work similarly to invoices in a few ways:

• They’re also associated with an customer
• And linked to an invoicing schedule

As in your General Ledger, credit notes can be allocated to already sent invoices or ones that have yet to be sent.

Credit Notes section in the invoicing schedule.

They’ll be displayed in the Credit Notes section of your invoicing schedules, if they exist, and can be created directly or from an invoice:

Creating a new credit note without associating it to an invoice

Creating a credit note already associating it with an invoice. This is done with an invoice selected > More Actions in the mid-top right of the page > Credit Note.

Prerequisites for Quickbooks Online (QBO)

If you’ll create credit notes in Subscript to QBO, please disable Automatically apply credits in your QBO settings (direct link), as below:

💥 This setting (if turned on) makes it so credits are automatically applied by QBO, and they may be applied to a different invoice before you have the chance to allocate this credit in Subscript (and not the one you want).

How to Create a Credit Note and Allocate it to an Invoice

Video tutorial

In this video, we show:

1. Where to see your credit notes in your invoicing schedule
2. How to create a credit note to allocate it against an invoice
3. Creating a new negative transaction vs associating an existing one, so that your accounting numbers are not changed
4. Applying a credit note to a new invoice vs an old invoice
   1. Applying to a new invoice is desired when an amount from a previously paid invoice will instead be applied to a new invoice
      1. This is often the case when a customer renews early (i.e. a “rip-and-replace” or a “recontract”) and has an overlapping service period between contracts
   2. Fully crediting out an old invoice that will never be paid, but cannot be voided because the accounting period is already locked
      1. This is often the case for bad debt, if a customer was invoiced but will never pay their invoice and the contract is effectively being canceled
      2. Note: this case can be more complicated, as it requires a decision on whether to change historical ARR. If historical ARR should not change, then the transaction will likely need some manual attention to make sure the resulting story is as desired.