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New: Conveniently send a credit receipt in FreshBooks

by Casey McKinnon | January 29/2013 | credit-memo, credit-notes, product-news-2

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.

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