Table of Contents

• Introduction
  • Additional Considerations
  • Example Credit
• View Credits
• Create A Credit
  • Add Credit via the Credits Module
  • Add Credit via an Invoice
  • Add Credit When Writing Off a Refund Amount
  • Add Credit via Import
  • Add Credit via API
• Refund A Credit

Introduction

A credit is a transaction that reduces your customer’s balance or directly reduces an invoice amount. Credits can be issued in response to an unexpected service interruption, correct an invoice error, write off services, or to handle overpayments. When issued, credits can be applied directly to an open invoice to reduce the amount a customer owes, or they can sit unapplied on a customer’s account to be applied to an invoice at a later date.

A credit is not a refund. See Manage Refunds to issue a refund to the customer following payment of an invoice. 

Additional Considerations

The Credit transaction does not support revenue or billing schedules, so the amount of the credit will impact the defined GL accounts entirely in the month posted. The GL impact of the Credit is as follows: 

• Debit to the account defined as the ‘Credit Account’ field on the line-level of the Credit
• Credit to the account defined as the default ‘Accounts Receivable’ account as saved in Menu >  Setup > Finance.

Example Credit

• A subscription is sold for a monthly, recurring service that is billed in advance from January 2022 through December 2022.

• The customer’s service was interrupted and they requested a partial credit.
• Create a Credit to reduce the customer’s current or future balance:

• If the affected invoice is still open, the credit can be applied directly to the open invoice. If the invoice is already paid, the credit will be unapplied and can be automatically applied to the next open invoice.

View Credits

Navigate to Menu > Operations > Credits.

Also view Credits for each Customer in the Credits Section from Menu > Customer Accounts > Select Customer.  

Click Credits from the Tab View or click Credits from the Card View.

 

Create a Credit

Preconditions:

The Credit template must be enabled in Menu > Setup > Manage Templates to email the Customer when a credit is created in Ordway.

 

There are multiple options to add a credit in Ordway:

1. Add Credit via the Credits module.
2. Add Credit via an Invoice.
3. Add Credit when writing off a refund amount.
4. Add Credit via Import
5. Add Credit via API

Add Credit via the Credits Module

Credit lines function similarly to invoice lines - the user specifies a product, description, quantity and price - but will credit A/R and debit the defined Product’s GL account.

Steps:

1. Navigate to Menu > Operations > Credits > Add.
2. Populate the credit details including Customer, Bill To, Ship To, and Credit Date. 
3. When Auto-apply to next invoice? is toggled ON, the credit will be automatically applied to the next open invoice until it is consumed.

4. Select product, quantity, and price for the item being credited.

5. Add or remove credit lines. Each line will be assigned its own Product & GL Account, allowing users to apply one credit across multiple invoices and invoice lines. 

6. The Journal Entry created by the Credit will impact GL accounts defined by the credit lines and the finance settings. The Journal Entry will:

• Debit the account defined as the ‘Credit Account’ field on the line-level of the Credit
• Credit the account defined as the default ‘Accounts Receivable’ account as saved in Menu >  Setup > Finance.

Note: The Credit Account automatically populates with the Invoice Posting ‘Credit’ account as defined in the Accounting Information on the Product:

The following Credit Account defaults to account number 4700, per the previous screenshot.

7. Sales Tax can be calculated at the line level if the Customer and Product meet taxable requirements. The line tax can also be edited or removed when sales tax is not applicable.

8. Save when finished.

 

Add Credit via an Invoice

Steps:

1. Navigate to Menu > Operations > Invoices > More Menu > Add Credit.

2. The credit is automatically populated with the related invoice lines and mirrors the invoice content.

3. Review and define the remaining credit details. 

4. When Auto-apply to next invoice? Is toggled ON, any unapplied balance on the credit will be automatically applied to the next open invoice until it is consumed.

5. The Journal Entry created by the Credit will impact GL accounts defined by the credit lines and the finance settings. The Journal Entry will:

• • Debit the account defined as the Credit Account field on the line-level of the Credit.
  • Credit the account defined as the default Accounts Receivable account as saved in Menu >  Setup > Finance.

6. Sales Tax can be calculated at the line level if the Customer and Product meet taxable requirements. The line tax can also be edited or removed when sales tax is not applicable.

7. Select the appropriate Invoice(s) to apply the credit to.

8. Save when finished.

Add Credit When Writing Off a Refund Amount

Steps:

1. Navigate to Menu > Operations > Payments > Actions Menu > Refund.

2. Add a payment to the apply to invoices section.

3. The Journal Entry created by the Credit will impact GL accounts defined by the credit lines and the finance settings. The Journal Entry will:

• • Debit the account defined as the Credit Account field on the line-level of the Credit.
  • Credit the account defined as the default Accounts Receivable account as saved in Menu >  Setup > Finance.

4. Select the appropriate Refund Amount radio button. Full or Partial. When Partial is selected, enter the refund amount.

5. Toggle Write-Off Refund Amount ON to write off the refund. This toggle serves as a shortcut to the Credits module from the Refund page. Once enabled and the refund is saved, you are automatically routed to the Credits page where you will write off the refund amount.

 

6. Save when finished.

Add Credit via Import

Ordway imports are a great way for bulk data entry. For a better understanding of this feature, refer to Ordway's Import Data or Export Data.

Note: When a customer provides a GL account for Credits via Import Data, we use what was provided as the Credit Account. When not provided, the  Credit Account is the Invoice Posting Credit Entry of the Product.

Refund a Credit

Refunds are records of money returned to the customer. A credit may be used for future use or can be refunded to a customer. See Manage Refunds for more details on refunding credits.