Carrying over credit from one invoice to another

In this article, we will review how to carry over credit from one invoice to another. An example of this scenario would be if a client overpays you for an invoice, and rather than receiving a refund, they prefer to apply their overpayment towards future services/invoices.

Say, for example, you’ve created an invoice for $700, but your client overpaid by $100. In this case, you can record the payment of $800, and enter a line item for +$100 to reflect that this credit will carry over to another invoice. You can label this line item as a “Credit” and in the description, state that the credit will be applied to a future invoice. Doing so brings the balance on the invoice to zero.

When it comes time to apply the credit on a new invoice, add a new line item with a negative unit cost for the amount of the credit. In this example, we have a "-100" Unit Cost value to reflect the $100 overpayment from the previous invoice, and in the description, we note that the credit was carried over from the previous invoice. This allows you and your client to track exactly where the credit came from.