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Credits and refunds on invoices

When to use credit memos vs refunds, how balance due is calculated, and typical workflows on paid invoices.

4 min read

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Overview

Use this guide on an open invoice when you need to correct billing, return money, or understand how paid amounts, credits, and refunds interact.

Where in the app: Sales → Invoices → open an invoice
Open: Invoices

Quick comparison

  • Credit memo — Reduces what the customer owes (or creates store credit). Use for billing corrections, cancelled work, or goodwill before you return cash.
  • Refund — Returns money the customer already paid (check, card reversal, FortisPay, etc.). A refund is cash out only; it does not replace a credit memo.
  • They work together — For paid invoices, use credit memo → apply credit to the invoice → refund any cash still owed back.
  • Sales receipt — Pay-now counter sale in Dirt Face. Use Refund money, Issue store credit, or Void on the receipt. See Sales receipts.

How balance due is calculated

On invoices in Dirt Face:

  • Balance due = Invoice total − Amount paid − Credits applied + Amount refunded
  • Amount paid is gross cash collected; it stays on the invoice even after you refund.
  • Amount refunded tracks cash you sent back to the customer.
  • Credits applied reduce what the customer owes without moving cash.

Typical cancelled-job example

Invoice $10,000, customer paid $5,000 deposit, job cancelled:

  1. Issue a credit memo for the full invoice amount (creates customer credit).
  2. Apply the credit memo to the invoice (reduces balance due).
  3. Issue a refund for the $5,000 deposit (returns cash to the customer).

Use that order when you need both a billing correction and cash back. Refunds alone do not replace applying a credit memo.

Unpaid invoices

If nothing was paid yet, void the invoice instead of issuing a credit memo or refund.

FortisPay refunds

Card and ACH refunds processed through FortisPay are recorded automatically when the processor confirms them. Return lines captured at refund time are saved on the refund record.

Recommended workflows

Example: $10,000 invoice, $5,000 deposit paid, job cancelled.

  1. Issue credit memo for the amount being credited off the job (e.g. full $10,000 or the cancelled portion).
  2. Apply the credit memo to the invoice (reduces balance due via Credits applied).
  3. Issue refund for cash to return (e.g. the $5,000 deposit).

Do not skip step 2. A refund alone does not correct the invoice balance in Dirt Face.

Example: $400 invoice paid in full, customer returns $200 of product.

  1. Issue credit memo for $200 (use return lines when applicable).
  2. Apply $200 credit to the invoice.
  3. Refund $200 cash if you are paying money back.

Balance due should end at $0 when billing and cash are both corrected.

Billing error on a paid invoice

  1. Credit memo for the incorrect portion.
  2. Apply to the invoice.
  3. Refund any excess cash collected, if applicable.

Goodwill credit (no cash back yet)

Standalone credit memo from Billing → Credit Memos. Customer can apply it to a future or current invoice.

Never paid

Void the invoice. Do not create a credit memo or refund.

Counter sale / sales receipt

  • Customer paid in full at the counter — open the sales receipt → Returns & credit → Refund money or Issue store credit.
  • Entire sale was a mistake and nothing was refunded yet — Void receipt.
  • Job with a deposit or pay-by-link — use an invoice instead of a sales receipt.