We get asked quite a bit what is better or more appropriate — a credit note or a discount. Here’s how we think about it and what we recommend:
👉 Discount is for negotiating with customers at the time of sale and is known before the invoice goes out (and is contracted in the deal). Usually, our clients want to show their customers the discount on the invoice, so this discount needs to be it’s own line item and represented using a negative dollar (or other currency) transactions.
👉 Credit note (or credit memo) is best used when a previously agreed and invoiced amount has changed. This could happen if a contract has been renegotiated, for example, and an amount paid in a previous invoice is going to be applied to future service instead; or it may be that the customer will never pay an invoice that was sent and needs to be written off as bad debt.
<aside> 💡 Credit Notes in Subscript Billing are supported for Xero and Quickbooks Online (QBO).
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Credit Notes in Subscript Billing work similarly to invoices in a few ways:
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.
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).
In this video, we show: