Deposits and credit notes

Each client has a credit balance: money you hold for them that can be put toward their invoices. Credit comes from three places:

• Deposits: payments on a deposit invoice, for example 50% up front before work starts.
• Credit notes: credit you issue yourself, for a discount, a write-off or a refund you're settling as credit.
• Overpayments: if a client pays more online (Stripe or Mercury) than was still due, the extra is kept as credit.

Credit is spent by applying it to one of the client's sent invoices, which lowers its balance due. Credit only applies to invoices in the same currency.

Who can do this: owners and admins create deposits, issue and void credit notes, and apply or remove credit. Members don't see the Deposits and credit card or the Apply credit button.

Who sees what: credit notes against an invoice follow that invoice's visibility: a member who can't see an invoice (it has a line on a confidential project they aren't on) can't open a credit note issued against it either. A deposit for a confidential project is hidden the same way as the project's other invoices.

Deposits

A deposit invoice is an ordinary invoice, marked Deposit in the invoice list and titled DEPOSIT INVOICE on the PDF. You send it and the client pays it the usual ways, including Pay now. What's different is where the money goes: every payment on a deposit becomes client credit, which you then apply to the invoices for the work.

How to bill a deposit

1. Open the client

   Go to Clients, open the client, and find the Deposits and credit card.

2. Start a deposit

   Click Deposit.

3. Set the amount

   Optionally pick a Project. Then either enter an Amount, or, for a project with a flat fee, choose Percent of the … flat fee and enter a Percent (the dialog shows what it works out to).

4. Check the details

   The Line description defaults to Project — Deposit (or Deposit). Set the Issue date and Payment terms (by default the project's, else the client's, else your organization's).

5. Create it

   Click Create draft deposit. You land on the new draft; send it like any other invoice.

You can also bill a deposit from Invoices → New invoice → Set amount: tick This is a deposit. That way it can have more than one line, a PO number and notes. See How to bill a set amount.

Check it worked: the draft shows a Deposit badge, and the client's Deposits and credit card lists it under Deposit invoices. Once the client pays, Available credit goes up by what they paid (part payments count as they arrive).

Things to know:

• A deposit doesn't count as Invoiced on Reports or toward a project's invoiced total; the invoice for the work does. The cash does count as Received when it arrives.
• Credit can't be applied to a deposit invoice.
• Like any invoice, a deposit can't be voided once something is paid on it.

How to apply credit to an invoice

1. Open a sent invoice

   Open one of the client's sent (not yet paid) invoices. When the client has credit in the invoice's currency, you'll see Apply credit.

2. Choose how much

   Click Apply credit. Amount starts at whichever is smaller: the credit available or the balance due. Add an optional Note (for example Deposit from INV-0012).

3. Apply it

   Click Apply credit.

Check it worked: the invoice's Summary shows Credit applied and a lower Balance due, the Payments card lists credit applied, and the client's Available credit went down by the same amount. If the credit covered the whole balance, the invoice is Paid and you get the invoice paid alert.

Applied credit isn't a payment: it doesn't count as Received in reports or the weekly digest (the deposit's payment already did).

To undo it, click the bin icon next to the credit in the invoice's Payments card. The credit goes back to the client's balance, and a paid invoice returns to Sent.

Credit notes

A credit note gives a client credit with its own number (CN-0001, CN-0002, … per organization, never reused), a reason, and a PDF you can send them. It isn't a refund by itself: it adds to the client's credit balance, which you apply to their invoices.

How to issue a credit note

1. Open the client

   Open the client and find the Deposits and credit card.

2. Start a credit note

   Click Credit note.

3. Fill it in

   Optionally pick an invoice under Against invoice (the credit note is then in that invoice's currency and its PDF says Against invoice INV-0042). Enter the Amount, the Issue date and the Reason.

4. Apply it now (optional)

   If the invoice you picked is sent and unpaid, Apply it to INV-0042 now is ticked: the credit goes straight onto that invoice, up to its balance due. Anything left stays as client credit.

5. Issue it

   Click Issue credit note.

Check it worked: the credit note is listed on the client's Deposits and credit card; click its number to open the PDF. If you applied it, the invoice shows the credit and a lower balance due, and lists the credit note under Credit notes issued against this invoice.

Writing off the rest of an invoice

A partly paid invoice can't be voided. To close it without the rest being paid, issue a credit note against it for the balance due (with Apply it now ticked). The invoice becomes Paid, and the credit note records why.

How to void a credit note

Click the bin icon next to it on the client's Deposits and credit card and confirm. Its credit is taken away; the PDF then says it was cancelled. You can only void a credit note whose credit hasn't been spent yet.

Troubleshooting

• No Apply credit button on an invoice. The client has no credit in the invoice's currency, the invoice is a deposit, it isn't sent yet, or it's already paid. You also need to be an owner or admin.
• This client only has $150.00 of credit available. You asked for more than the client's credit balance. Lower the amount.
• That's more than the $600.00 still due on this invoice. Credit (like a payment) can't take an invoice below zero.
• Credit can't be applied to a deposit invoice. Deposits are where credit comes from; apply it to the invoice for the work instead.
• A percentage needs a project with a flat fee. Enter an amount instead. Percent deposits are worked out from the project's flat fee; set one on the project, or enter an amount.
• This credit has already been applied to invoices. Remove it from them first, then void the credit note. Remove the credit from those invoices (bin icon in their Payments card), then void the note.
• Credit from this payment has already been applied to other invoices. Remove that credit from them first. You're deleting a deposit payment whose credit was spent. Remove the credit application first.
• Credit notes can only reference a sent or paid invoice. Pick another invoice, or none.

Over the API and MCP

Invoices over the API and the MCP server include kind (STANDARD or DEPOSIT), amountPaid, creditApplied and balanceDue. GET /api/v1/invoices/{id}/payments and the list_invoice_payments tool list an invoice's payments, credit applied to it and credit notes against it. POST /api/v1/invoices/custom and the create_custom_invoice tool create a deposit with "deposit": true. Issuing credit notes and applying credit are in the app only.