--- title: Credit Memos description: Give a client credit, email it to them, and apply it to the invoice it pays. url: "https://theasst.com/docs/credit-memos/" updated: "2026-09-30" category: Sales/Service --- # Credit Memos A credit memo reduces what a client owes you. Use one when you need to give a client credit — for returned goods, a pricing correction, a service you are not charging for, or a small balance you would rather write off than chase. ## What a Credit Memo Is in TBA In TBA, a credit memo is an [invoice](https://theasst.com/docs/invoices/) with a **negative total**. It lives alongside your other invoices, appears in the client's invoice list, and is posted to your books like any other invoice, just in the opposite direction: it lowers your Accounts Receivable and offsets the income account of the items on it. A credit memo does two separate things: 1. **It lowers the client's balance.** This happens as soon as the credit memo is saved. The client's total balance, AR Aging, and statement totals already include it. 2. **It can be applied to the specific invoice(s) it pays.** Until you do this, the credit memo and the invoice it was meant for both show as open. Applying the credit memo settles them against each other, so the invoice shows as paid and the credit memo shows as used up. If you imported your data from QuickBooks, credit memos came across as invoices with negative totals. They work exactly as described here. ## Creating a Credit Memo 1. Add a **new invoice** for the client the credit is for. ![](https://theasst.com/wp-content/uploads/2026/09/credit-memo-create.webp) 2. Add a line for each thing you are crediting. Use the **same kind of item** you would have sold, so the credit reverses the right income account. If the credit is not tied to a product or service (a courtesy credit or small-balance write-off, for example), use an item set up for that purpose whose income account is the account you want the credit charged to. 3. Enter the **quantity as a negative number** (for example, `-1`) with the normal positive price. The line amount and the invoice total will be negative. 4. Check the **sales tax code**. If you are crediting something that was taxed, use the same tax code so the tax is credited too. For a write-off with no tax, leave it untaxed. 5. Use the Notes field to record why the credit was given, so anyone reading the client's history understands it. 6. Click **Save**. The invoice now has a negative total. It is your credit memo. **Note:** a credit memo prints and emails using the standard invoice layout, with negative amounts. It is not labeled “Credit Memo” on the page, so put that in the Notes field if you want the client to see it clearly. ## Emailing a Credit Memo to a Client You email a credit memo exactly as you would an invoice. 1. Open the credit memo. ![](https://theasst.com/wp-content/uploads/2026/09/credit-memo-email.webp) 2. In the sidebar, choose **Send → Email Invoice**. 3. Click to choose one or more recipients from the client's email addresses and contacts, or choose *Specify email address(es)* and type addresses separated by semicolons. 4. Choose how to send: - **Send System Email** — TBA sends the email for you with the credit memo attached as a PDF. A Compose Email window opens first so you can review and edit the From address, subject, and message before it goes out. - **Send It Yourself** — the PDF opens in a new tab and a new message opens in your own email program. Attach the PDF from the tab before sending. Either way, TBA records the email in the client's Communications and in the Email Log. The message text comes from your Invoice email template in **General Options**. Because that wording is written for invoices, you may want to adjust the subject and message in the Compose window (for example, “Your credit memo from…”). ## Applying a Credit Memo to an Invoice Applying is what connects the credit to the invoice it pays, so the invoice shows as paid and the client's records are accurate. 1. Open the credit memo. ![](https://theasst.com/wp-content/uploads/2026/09/credit-memo-view-menu.webp) 2. In the sidebar, choose **View → Apply Credit Memo**. This item appears only on a saved credit memo that has not been voided. 3. The window shows the credit memo's total, how much has already been applied, and how much is **remaining**. Below that is a list of the client's open invoices with each one's balance. 4. Type the amount to apply next to each invoice. To fill them in automatically, click **Fill oldest first**, which starts with the oldest invoice and applies up to each invoice's balance until the credit runs out. **Clear** empties the boxes. ![](https://theasst.com/wp-content/uploads/2026/09/credit-memo-apply.webp) 5. Click **Apply**. Afterward: - An invoice paid in full by the credit changes to **Paid**; one paid in part changes to **Partial payment**. - The credit memo's remaining amount goes down, and it changes to **Paid** once it is completely used. - Client balances, AR Aging, and “as of” statements no longer list the settled invoices as open. You can apply a credit memo in more than one step — for example, part of it now and the rest to another invoice later. You can never apply more than the credit memo has left, or more than an invoice still owes, and you can only apply a credit to the same client's invoices. ### Seeing What Has Been Applied Open **View → Payments** on either the invoice or the credit memo. Below any payments you will see a **Credit memo applications** list showing where each credit came from or went to, with the date and amount. ![](https://theasst.com/wp-content/uploads/2026/09/credit-memo-applied-to-invoice-1024x576.webp) ### Undoing an Application If you applied a credit to the wrong invoice, click **Remove** next to that application — either in the **Apply Credit Memo** window (under “Already applied”) or in the **Payments** list. The invoice owes that amount again, and the credit memo has it available again. You can then apply it correctly. ## Good to Know - **No extra accounting entry.** Applying a credit memo makes no new journal entry. The credit memo and the invoice were each posted to your books when you saved them; applying only settles them against each other. - **Voiding.** A credit memo that has been applied cannot be voided until you remove its applications. An invoice that has credits or payments applied cannot be voided until they are unapplied. - **Client statements.** A period statement lists every invoice and credit in the period, so a credit memo appears as a negative line and the balance reflects it. An “as of” statement lists only what is still open, so invoices fully settled by a credit memo are not shown. - **Permissions.** Applying and removing credits uses the same permission as applying payments. Related: [Invoices](https://theasst.com/docs/invoices/) · [Client Payments](https://theasst.com/docs/client-payments/)