Credit Memos in Zoey

Credit Memos can issue store credit to an Account, or create a Refund, without unapplying payments or reopening an Invoice.

Issue credit for specific items, or to the Account without linking the Credit Memo to any invoices.

After you create a Credit Memo, its available balance will be applied to one or more Invoices, left available for future use, or refunded to the customer.

A Credit Memo can be created on its own (for example, a goodwill credit) or be linked to items and return them to stock. Once created, the credit is applied to open Invoices automatically. Learn more about how credit gets applied, and the settings to control in How Credits are Applied.

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Credit Memo Types

There are two types of Credit Memos. Both can be applied to Invoices the same way — the difference is how the credit amount is built. When you start a new Credit Memo, you'll pick the type first:

• Item-based — Credit tied to specific products or invoices.
• Amount-based — Credit any amount with no inventory impact.

Item-Based Credit Memo

An item-based Credit Memo is built from specific products, using their quantity × price to set the total amount. Link your Credit Memo to invoices and items if the credit applies to a specific return, damaged goods, or missing items.

You can add items to an item-based Credit Memo in two ways:

• Standalone Item(s) - add products directly to the memo.
• Item(s) from Invoice - credit a whole Invoice, specific lines, or partial quantities.

When you add items from an Invoice, tax and discount amounts are prorated per unit from the Invoice line, so partial-quantity credits stay accurate. Configurable and bundle products expand into their parent and child rows automatically so your inventory and item display stay correct.

Item-based Credit Memos also include a Fee to deduct from the amount being returned.

Amount-Based Credit Memo

An amount-based Credit Memo is a flat dollar amount you enter — for example, a $50 goodwill credit. You can still record separate shipping, tax, and discount totals on the memo if your business needs them broken out.

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Credit Memo Totals

For both types of Credit Memos:

Grand Total = Subtotal + Shipping & Handling + Tax + Adjustment − Discount - Fee

Use Adjustment to modify the Credit Memo Grand Total. A positive amount increases the Grand Total, and a negative amount reduces it. Adjustment is available for both item-based and amount-based Credit Memos.

Use Fee to deduct from the Credit Memo Grand Total. Fee is available only for item-based Credit Memos.

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How to Create a Credit Memo

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How Credit Is Applied Automatically

• When a new Invoice is created any available credit for that customer is applied to it automatically. Credit reserved for that order is used first, then any other available credit, oldest memo first.
• When a new Credit Memo is created, its credit is applied automatically to the oldest open Invoices, one by one, until the credit runs out or every Invoice is paid.

If the credit doesn't cover the whole Invoice, the remaining balance stays outstanding under the account's payment terms.

• Auto-Apply New Credit to Open Invoices — If enabled, a newly issued credit is applied to the account's other open invoices. If disabled, the account can carry an invoice balance and a credit balance at the same time.
• Auto-Apply Credit Balance to New Invoices — If enabled, an account's existing available credit is automatically applied when new invoices are created. If disabled, only credit reserved by the order's checkout is applied. All credit reserved for the order is applied to its invoice, even when this setting is disabled; additional available credit is not applied automatically.

Which Credit Gets Used First?

All of a Customer's and their Company's Credit Memos form one pool. Credit is consumed oldest-first, by the date the memo was created. Customer-owned and Company-owned credit have equal priority — the oldest memo always goes first.

Apply Credit to an Invoice Manually

You can still apply credit by hand from a saved Credit Memo using the Apply Credits action. Day to day you shouldn't need to do this since Zoey automatically handles it.

1. Open the Credit Memo.

2. Click on the 3-dots in top right, then Apply Credit.

   

3. Select the invoices and enter the credit amount to apply.
   

   

4. Decide to send an email or not and click Apply Credit.

The applied amount reduces the Invoice balance and the available Credit Memo balance.

Real World Example

• Day 1 — Invoice #301 is created for $600. The Customer has no credit, so the Invoice sits outstanding.
• Day 3 — You issue an $800 Credit Memo. $600 auto-applies to Invoice #301 (now paid). The memo is now Partially Applied with $200 remaining.
• Day 5 — The Customer places a $1,000 order. The remaining $200 is reserved for that order, so their visible available credit is $0. Their card is authorized for the full $1,000.
• Day 10 — The Invoice for that order is created. The reserved $200 applies automatically, and $800 remains due under the order's payment terms.

Credit Memo Balances

A Credit Memo may have:

• Available Credit: Credit that has not yet been applied or refunded.
• Applied Credit: Credit that has been applied to an invoice.
• Reserved Credit: Credit selected for use on an order but not yet applied to an invoice.

Credit Memo States

A Credit Memo's state reflects how its original credit amount is currently being used.

• Open: The Credit Memo has an available balance that can still be applied or refunded.
• Partially Applied: Part of the credit has been applied to one or more Invoices, while the remaining balance is still available.
• Fully Applied: The entire Credit Memo balance has been applied to Invoices. No available credit remains.
• Reserved: Some available credit has been selected for an Order but has not yet been applied to an Invoice.

A Credit Memo may include more than one balance state at the same time. For example, part of its balance may be applied to an Invoice while another portion is reserved for an Order or remains available.

Once the full Credit Memo amount has been applied or refunded, the Credit Memo no longer has an available balance.

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Credit at Checkout

When a Customer with available credit checks out, a credit line appears in the order totals showing how much credit will be applied towards the order.

When the order (or quote) is placed, that credit is reserved for this order so another order can't over-spend it at the same time. The reserved credit:

• Caps at the order total. Any extra credit stays available for other orders.
• Converts to an actual applied credit transaction automatically when the Invoice is created.
• The reserved credit amount is released back to the account if the order is canceled.

Depending on the payment method, checkout also shows an Estimated Total (what will be owed after credit) or an Amount Due Today (what's charged now after credit).

Credit and Failed Payment Captures

When using Capture Payment, Zoey applies available Credit first, then attempts to capture the remaining payment amount.

If the payment capture fails, the credit being applied during that attempt is automatically voided. The original Credit Memo's balance remains unchanged. Credit is not applied automatically in failed payment scenarios.

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Credit Memo Statuses

You can add comments, email the Customer, and print the Credit Memo PDF in every status.

Available credit on a memo = Grand Total − applied amount − reserved amount. A Customer's total available credit is the sum across all their Unapplied and Partially Applied memos.

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Comments and Notifications

Comments on a Credit Memo can be internal-only or visible to the customer. When you add a customer-visible comment, you can choose to send it by email.

The Credit Memo emails live in Settings > Emails, under Orders: New Credit Memo, Credit Memo Update, and Credit Memo Cancel. You can edit or disable any of them there.