Credit Memos in Zoey

Credit Memos create credit on an Account. Credit can be issued for specific invoiced items or as a general Account credit.

After a Credit Memo is created, its available balance can 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 from an Invoice. Once created, the credit is applied to open Invoices automatically.

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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 product line(s).
• Amount-based — Pure dollar credit with no inventory impact.

Item-Based Credit Memo

An item-based Credit Memo is built from specific products, using quantity × price. Use this type when the credit is tied to items — like a return or a shipment shortage.

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.

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.

Totals

For both types:

Grand Total = Subtotal + Shipping & Handling + Tax − Discount

The Grand Total is the credit available to apply. Tax includes any shipping tax — there's no separate shipping-tax line in the total.

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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 or Company 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 your normal payment terms — nothing errors or blocks.

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.
• Refunded Credit: Credit that has been returned to the customer.

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 go toward the order. The label depends on the payment method:

• Credit Balance — credit is available but doesn't cover the full order.
• Credit Applied — credit covers the full order and the payment method captures right away.
• Available Credit — credit covers the full order and the payment method authorizes now, captures later.

When the order is placed, that credit is reserved — held for this order so another order can't spend it at the same time. The reservation:

• Caps at the order total. Any extra credit stays available for other orders.
• Converts to an actual application when the Invoice is created.
• Is released if the order is canceled first.

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).

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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.