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New: Conveniently send a credit receipt in FreshBooks

by Casey McKinnon  |  January 29/2013  |  , ,

Starting today you can notify a client that you have issued them a credit. Known commonly as “credit notes”, “credit receipts” or “credit slips” (depending on where you live), they allow you to easily send documentation of issuing credit to your clients, attribute it to a client’s future invoice and have it properly accounted for in your Reports. The addition of these documents aims to improve the overall bookkeeping experience of FreshBooks and removes your old need to send this type of notification manually.

To heavy users of our previous credit workflow, we are terribly sorry for any inconvenience this may cause and please know we didn’t take this decision lightly.  That said, we have done a great deal to improve the FreshBooks platform recently (automagic expense import, iPhone and iPad apps), and this is another important advance.  If you do feel as though you have been deeply affected by this change, please do not hesitate to contact us and we will do all that we can to make it right.

Why care about credit receipts?

If you don’t issue credit to your customers, you can safely return to your cup of coffee.  If you do ever issue credit to your clients for future work, or as a refund for a deleted invoice, then read on…

The ability to document a credit transaction is an important part of updating your books and communicating with your clients.  Until today, when you added credit for their clients, there wasn’t a “note” you could create in FreshBooks to send to clients that proved that the credit existed.

Not only is it an essential item for your own accounting (love that paper trail!) but also key for your client’s files, too. Basically, if there’s no corresponding invoice for a client’s payment, they can’t record their outstanding credit in their own accounting system. And this matters for tax time reporting. Credit notes like the ones now available in FreshBooks are also tax law requirements in several countries including UK, South Africa, Guatemala, Honduras, Nicaragua, Belize, El Salvador, Costa Rica, and Panama.

A better way to make credits in FreshBooks

Credit receipts have been integrated into your existing workflows with a familiar format. If you are comfortable making a FreshBooks Invoice, you’ll have no trouble creating a credit receipt. You can find Credits as a sub-tab under the “Invoices” tab. When you create a credit, it gets added to the client’s pool of credit.  This means the receipts themselves are not “spent” and have no cash value, but instead are meant to show documentation of credit being issued.  Whenever you client logs into FreshBooks, they will see the list of credits you’ve given them, along with the overall balance of credit they have with you.

Credits offer seamless workflow for pre-payments or deposits

Credit lets you easily document pre-payments or deposits for credit in FreshBooks. When you need to refund your customer, say, when a client sends you money before you need to invoice them, they send you a deposit or pay a retainer, you can now create and send them a credit receipt for that pre-payment. Later on, you can easily apply it to invoices you create down the road. A credit receipt adds to the pool of available dollars (aka credit) for that client, and it’s easy to see a client’s total from their Profile page.

Call it whatever you want

We know that depending on where you are in the world these credit receipts may be called different things, so we’ve built in the ability for you to change what these are called within your FreshBooks account.  If you need these documents you present to your clients to have a special title – like “credit receipt” or “credit note” – you can also rename your Credits to whatever you prefer by editing the “clean invoice” template and customizing the title. For anyone who has issued credits in FreshBooks in the past, these have already been converted to Credit receipts for you in your account and can be viewed under the ‘credit’ sub-tab under “Invoices”.

What else has changed?

In order to enable this new document, we’ve made some adjustments to the credit issuance process, and I’ll explain what’s changed and why.

  1. We have removed the ability to add internal notes and payment methods to Credits.  To maintain a consistent experience with Invoices and Estimates we removed these fields.
  2. You cannot modify the underlying payment associated with a Credit.  The credit receipt is now the authoritative source for this information, so in order to keep the payment and the credit receipt in lock-step with one another, when you attempt to modify the payment you will in-fact be modifying the credit receipt directly, which then modifies the underlying payment for you.

How do we know this works?

When FreshBooks launches new functionality, we roll it out slowly to targeted groups of beta customers to let them try it out first.  They then tell us what they think, offer feedback and submit bug reports.  We learned a lot about how people manage Credit within their FreshBooks account and the role this new document plays in that process.  We also learned that this new document doesn’t actually impact everyone, in fact some people yawned when they saw it, but for those who did need it, they’ve told us it is incredibly valuable.  We understand this change doesn’t impact everyone the same, but are looking at it as a solid foundation for which to build future additional functionality upon.


  • Phil

    Hey Alflores – We know there is a huge demand for this functionality, so don’t worry this is definitely a hot topic that is on our Product teams radar :)

  • Phil

    Thanks Jason. It’s always great when we can collect the feedback from FreshBooks users and turn it into a real feature! Glad we could help make your invoicing a little easier :)

  • Jay

    Adding automatic recurring credits would be the icing on the cake. Then I could truly automate my entire invoicing/credit workflow.

  • Phil

    Don’t worry Justin, we are working on a time machine in the future that should help. The idea is to collect payments for invoices more than 30days past due and then return the payment to the present, thus paying the invoice before you even generate it!
    We are having some problems with our Flux Capacitor though… and some mumbo jumbo about altering the time-space continuum :(

  • Phil

    Justin – Credits in FreshBooks are to acknowledge income received, so they will count as “money”. So if you’d like to give a customer a discount for their next order, I recommend either using the “Discount” field on the invoice – or adding a -negative line item on your invoice to reduce the total that they owe you. You can email or call us and we can walk you through the process and explain it to you.

    Andrew & Maggew – Thanks great to hear this makes your billing lives a little easier :)

  • Josh A.

    Excellent! Now, how about deposits?

  • Phil

    Hey Jacki – Thanks for the suggestions. We know there is a big demand for deposits and retainers. This feature wasn’t meant to solve “retainers” for FreshBooks, but you’re right it is a step in the right direction. We have a lot of plans for 2013 so keep your eyes on this blog for more updates ;)

    ereinach – Permissions are something that we are currently looking at. We’ve received a lot of great feedback regarding more expansive permissions lately and it’s helped guide us in what changes we’d like to make. To further reinforce this need with our Products team I’ll send your post over for to them ;)

    Dean – Great idea! I’ve sent that over to our Products team on your behalf. Thanks for sharing that with us!

  • Phil

    Suzanne you can definitely create the credit receipt for your client then use that as payment for invoices created in the future :) If needed you can itemize your credit receipt to reflect what the credit was for – so you could specify when they are from your “Save Local” coupons.

  • http://www.theotcentre.co.uk Mark Spencer

    This is a great feature. It would be very useful to be able to apply credits to selected project(s) for a client. When you’re running multiple projects for a client, as we do, then a credit will most often apply to a particular project.

  • http://julieink.com Julie Trelstad

    I’m in Freshbooks heaven! This was the ONE feature I’ve been wishing for. Thank you Freshbooks!

  • http://www.pivotslc.com Jane

    Love it. I used it today. Thank you!!!

  • http://www.studiothink.com chandra

    yay!!!! now I don’t have to manually let clients know we gave them a credit. PLEASE, PLEASE tell me these export to Xero too???

  • Shainy

    Thanks Phil for your response. That option will not work. Clients should be addressed Title Last Night, not with their first name in between. Salutation is a critical field in any database or invoicing program, it’s very surprising that this has been overlooked to start and still has not been corrected after all this time. A week doesn’t go by that a secretary doesn’t email us to let us know we’ve got her name messed up – it looks pathetic.

  • Sam

    Hi Freshbooks,

    When I log on and go to the Credits subheading under invoices, I see that all of my previous credits have been marked “sent.” I had credits that I entered in months ago as part of my regular accounting. It would be really weird for my customers to now receive a credit notification email for those old payments since we’ve already taken care of everything — ancient history. Have email notices indeed been sent to all of my clients with these old credits? If yes, I will need to send them a damage control email so that they aren’t totally confused as to why they received all of those emails. Please let me know, and in the future please ask before sending notification of anything new to my clients! I love this new feature but am perturbed that things have been sent to my clients without my knowledge.

  • Melony

    I am very glad this tool was added. Thanks.

    Can I use this tool to generate credit receipts for credit collected before the tool was integrated?

    I have not issued credit receipts to my older clients yet. I assume that they can see their credit balances when they log on, to check an invoice. Right?

  • http://ww.thegraphicelement.com Laura

    I love logging on to find out about new and improved features! Thanks FreshBooks!!

  • http://Deepsky.co Nell

    Love this new feature; already work with my client to implement this into workflow. But since there is no report (we rely on report to import data into accounting system), it will be great to have some report to show what’s the credit regarding, so we can map them correctly into different accounts. Since you already do an amazing job to provide us the ability to enter item/task under credit note. It will be super helpful to have a report similar to Invoice Detailed or Tasks invoiced.

  • Phil

    Hey Mark, that is a great idea!! Thanks for the suggestion, I’m going to send that over to our Products team. If you come up with anymore just drop us an email or give us a ring (we love ideas!!).

    Julie, Jane & Chandra – Thanks :) Glad to hear this makes life easier :)

  • Phil

    Thanks for the follow up Shainy! I totally see your point and need for this. I’ve already passed this along to our Products team, so hopefully we’ll see something in one of our future updates :)

  • http://Www.tblmarketing.com Rob

    Perfect timing Freshbooks!

    Our book keeper was asking for these just this morning; I can now relax knowing that Linda our book keeper will be happier than ever!

  • Phil

    Hey Sam – Don’t worry.. we didn’t send out any super old credit receipts to your clients :) The status is marked as “sent” as we had to apply a status to something that previously never had a status. Since under the old system when you added these credits your client would be able to see their balance right away on their client dashboard (as they can now), we figured the most appropriate way to mark these was that the customer received them. That being said, we didn’t email them anything once this new feature was enabled :) Moving forward these credit receipts will only be marked as “Sent” if you truly did send it to the client. Sorry for the confusion and hope this clears things up!

  • Phil

    Hey Melony, yes your client can log in and view their credit balance – just as they could before this feature was introduced. If you’d like to re-send a record of a credit created before this feature, just go to your “Credits” tab, find the credit and then send it out. Since ALL your credits are on this page, we’ve already converted your old credits into the new credit receipt format. So no need to recreate anything :) You can send these by checking the box to the left then clicking the “Send” button above the list.

  • Phil

    Hey Nell, thanks for the feature idea! I’ll have our team look into that :) I’ve filled a feature request ticket with your email on it, so we can reach out to you if we need more info on functionality and what you would like to see on this. Thanks again!

  • http://www.paraplanner.com.au Rich

    Hi Freshbooks Team,

    Love the new credit receipt, makes for a smoother way for me to process credits.

    Good add!

  • http://www.bancmedia.com Martin Cozens

    Brilliant. A welcome addition here in the UK. Will save having to manually create and send “credit notes”. Thanks.

  • Carla

    Great! I was in the middle of moving my account away from FreshBooks because I am now doing a lot of retainers and deposits. I will have to see if I can work the credits into my workflow somehow because I really want to stay.

  • Carla

    UGH! So we can’t apply the credits to a specific project. I’m a sub-contractor and one of my clients has a ton of projects. :(

  • Brendan

    As a contractor, this is a very useful feature for me. I have to agree with the comment from Carla though. Being able to apply credits to individual projects would be great.

  • Brian

    Well I was really excited about this, but as I read more about it in the comments here, I don’t feel like this is going to solve my issue.

    Basically, if I’m understanding it correctly, the credit still counts as “income” in FB. That is, previously, a credit was just another form of payment and so it counted as income (especially important when it’s being imported into a real accounting system).

    I was hoping that this was a finally a way to GIVE a client a credit toward future billings, but it seems it’s just a way to acknowledge that the customer has given you some form of payment that hasn’t been applied to an invoice YET.

    For example, if I bill a customer $100 every month for a service, and this month I need to give them a credit for $25, the best course of action for me and my customer is to just bill the customer $75 next month.

    On the old credit system, if I gave them a $25 credit, they would indeed only be billed $75 on their next recurring invoice, but Freshbooks would consider my income as $100. So then in my accounting system my books would be wrong.

    If my understanding is correct, this has not changed.

    I guess there is a difference in terminology here in that you (FB) would consider that $25 to be a “refund” or a “discount” but a lot of people here in US would call it a credit.

    Unfortunately you currently have no way of providing or keeping track of refunds. To do what I’d like, I have to edit the recurring profile BEFORE the invoice for next month is generated with the new amount, then after the invoice gets generated I have to edit it again to put it back to where it should be. If I need to apply several credits at different times in a month, this compounds. Expand that to a few dozen recurring profiles per month and you can see what a hassle this really is.

  • Brendan

    Down payments, deposits, and retainers please. Just reading these comments its clear that this is something that a lot of you’re clients want. Including me.

  • Mark

    Im not sure if FB has indeed created a Credit Note in accounting terms which need to be the reverse transaction to a invoice. On the expense or the supplier side you get a SINV (Supplier invoice) and the reverse transaction is known as a RTS (Return to Supplier). The Credit note you have developed albeit useful is NOT the accounting Credit note which we still need todo as a negative invoice..? See http://en.wikipedia.org/wiki/Credit_note

    Perhaps the FB credit note is one and the same which can be the precursor to a refund to the client – and then loaded as a expense…?

    Feels like the FB Credit note is really a prepayment (purchasing credit on your Star Bucks card) and not a Credit note in accounting terms.

  • http://www.freshbooks.com/our-team.php#casey Casey McKinnon

    Rich – thanks, we’re really glad you like it.

  • http://www.freshbooks.com/our-team.php#casey Casey McKinnon

    Martin, Carla – I hope this streamlines your billing process, please let me know if there’s anything else we can do.

  • http://www.freshbooks.com/our-team.php#casey Casey McKinnon

    Carla & Brendan,

    While applying credits to a specific project does sound like it would help in your particular situation, we think it is too complicated for our product. For now, credits will remain at the client level, rather than going down to a project level, and we’ll watch how people use them before making further changes.

    Casey

  • http://www.freshbooks.com/our-team.php#casey Casey McKinnon

    Hi Brian,

    You are correct that this hasn’t changed how we report income. When you record a credit, it has “real” value, as opposed to being a method for reducing an amount owing. Your best bet is always to add a line item or adjust the sale price of an item, but this cannot be done in an automated way with recurring billing. To be honest, your particular situation with recurring invoicing isn’t much improved with this feature, but we are actively looking at how we can better support more credit scenarios like yours.

    Casey

  • http://www.freshbooks.com/our-team.php#casey Casey McKinnon

    Brendan – you’re right, we’re watching feedback closely here. Thanks for chiming in, and please fill out more details about what exactly you need here: http://www.freshbooks.com/freshideas

  • http://www.freshbooks.com/our-team.php#casey Casey McKinnon

    Hi Mark,

    You’re correct that this cannot reverse transactions, and shouldn’t be used in this way.

    We’re listening to feedback here, and will let you know if we make any further changes.

    Casey

  • Summer

    YEA!!! I have been working around this for… well, since, gosh has it already been over 7 years??? THANK YOU THANK YOU THANK YOU!!

  • KP

    I don’t work with Freshbooks, but work with a vendor who does. What we really need is a credit memo, a method to reduce income billed on a previous invoice. Reducing a future invoice for the amount of the credit doesn’t provide a good trail back to the original invoice that needed to be adjusted, whereas a credit memo can then be applied against the original invoice. Reading the posts it appears the “credit note” is just another method of recording payments received.

  • Cramsey

    Are credits automatically listed as income? We often issue credits to our clients that are not income, but rather a courtesy credit or something of this nature. Is it possible to have them not classified in our Income report?

  • merylmanning

    Hi Cramsey,

    Thank you so much for reaching out.

    The credits in FreshBooks are actually considered income, they are normally designed to be applied to an invoice that already has a down payment from the client that needs to be applied.

    It isn’t possible to de-classify them as income, but if you could e-mail me a little more information on the instances that you use credits, I can definitely see what kind of solution we can come up with :) meryl@freshbooks.com

  • merylmanning

    Hi KP,

    Thank you so much for reaching out.

    I can totally see the need for both. RIght now you are correct the credits in FreshBooks act as a form of recording a payment you have received before an invoice is created, and are counted as income within your reports.

    We are definitely looking into adding more options in terms of what you can do with credits and how they could be applied to client’s past invoices and accounts. If you wanted to e-mail me your contact information, I could certainly keep you updated on what we have available!

    support@freshbooks.com


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