Credit Management: #1 Credit You Owe vs Credits Owed to the Business

Think about the last time you ordered food online. You might have paid in advance through your card, but you received a $20 refund because your order got delayed or cancelled. In most apps, refunds don't go into the bank account directly; instead, they're stored as a credit in your food delivery account, ready for your next order.

Imagine a mom-and-pop store at the corner of your street, where you buy things "on tab." You take home items today and promise to settle the bill at the end of the month.

Now, flip that perspective. The same store probably receives goods from its supplier every week, but doesn't pay for them immediately. The supplier allows a few days or even weeks before payment.

They are more than just promises, more than trust. They are credits.

Credits like these are everywhere in our daily lives. Sometimes we owe them, sometimes they owe us. Moreover, in business, this constant give-and-take of credit plays a critical role in keeping transactions flowing smoothly.

Understanding the Two Sides of Credit 

In every business, credit flows both ways. You extend credit to your customers when you allow them to pay later, and sometimes you owe credit back, as adjustments or refunds. These two sides of credit determine how efficiently your business manages cash flow, customer relationships and revenue recognition.

Let's break them down.

Credits Owed to the Business 

You're extending credit when your business provides goods or services before receiving payments. It's a standard business practice that builds trust and encourages repeat sales, but it also means a portion of your revenue is pending to be collected. This pending amount is your credit owed or accounts receivable.

Some of the common forms of Credit Owed to the business are:

Sales on Credit:

The most common form of credit is sales credit. You deliver the product or service and give the customer a set number of days to pay, say, Net 15 or Net 30.

For example, a freelance designer might deliver a logo package to a client and issue an invoice payable within 10 days. Until payment is made, that amount remains as credit owed to the business.

Recurring or Subscription Billing:

For services that run month after month, invoices are generated periodically, and the payment cycle follows agreed-upon terms. It may be either the start or the end of the month.

Take a SaaS company offering a monthly plan. Each invoice raised at the start of the month gives the customer a set time to complete the payment, making it a recurring credit relationship.

Instalment or Milestone Billing:

Large or ongoing projects may be billed in parts; each payment represents a credit instalment.

For example, a software development firm might bill 40% upfront, 30% after a beta release and 30% after project completion. Each stage involves extending short-term credit until the payment arrives.

Overdue Receivables:

When payments extend beyond the due date, those invoices become overdue and need close follow-up.

For instance, a wholesaler who has multiple clients on credit terms may notice one customer's invoice consistently crosses the 45-day mark, prompting reminders or credit hold decisions.

Credits You Owe 

Now let's flip the perspective.

Sometimes, your business owes customers a credit. This could be because they paid in advance, overpaid, or a transaction needed adjustment. These credits act as a promise, a value the customer can use against future invoices or purchases.

Some of the common forms of Credit You Owe are:

Credit Notes:

This is issued when you need to reverse or adjust part of a billing amount, such as when a customer returns goods or a post-sale discount occurs.

Imagine a retailer who invoices a customer for 100 items but later finds 10 were defective. Instead of issuing a refund, they create a credit note for the value of those 10 items, which the customer can apply to their next purchase.

Overpayment:

When a customer pays more than what's due, the excess is treated as a credit balance for future invoices.

For instance, if a customer's invoice total is $1900 but they transferred $2000, the extra $100 becomes a credit balance that can automatically be adjusted against their next invoice.

Advance Payment:

When a customer prepays, the amount remains a credit until applied against an upcoming service or product delivery.

A good example is a training provider who receives $600 upfront for a workshop scheduled next month. That amount is held as customer credit until the session occurs and the invoice is adjusted.

Balancing the Equation 

Both sides of the credits are equally important.

1. 
   If the "credit owed to you" side grows too much, your cash flow is weakening.
2. 
   If the "credit you owe" side isn't correctly managed, you risk misreporting revenue or confusing customers.

A healthy credit management process means,

• Payment terms are clearly defined.

• Overdue invoices are tracked and followed up on.

• Credits and refunds are issued promptly.

• Use automation to handle reminders, adjustments and reporting.

 When these pieces are in sync, your business operates with confidence, as every transaction is accounted for and every balance is clear.

Meet Zoho Billing 

Credit management becomes much easier when your billing system does the heavy lifting.

With Zoho Billing, businesses can:

• Define flexible payment terms at the customer level or invoice level.

• Track receivables in real time with clear visibility into what's due, overdue or funds collected.

• Issue credit notes instantly for returns, discounts or adjustments.

• Apply customer credits automatically against future invoices or renewals.

• Automate reminders and the dunning process to keep cash flow consistent.

• Clear reports on what's paid and unpaid, how long a customer takes to pay, and how often it fails.
  

In this series, we will examine each of these functionalities deeply and explain how they offer visibility and clarity, letting your team focus on growth rather than following up on credits.

 

Up Next: Setting the Right Payment Terms 

• Topic Participants

• Hari | Zoho Billing

  

• Sticky Posts

• Community Learning Series | Digest #5 — September 2020

  Dear customers, We're happy to bring you the September edition of our #CommunityDigest! Keep track of your subscription KPIs right from your smartphone: Last month, we enhanced our Android mobile app to help our customers get daily updates on their business health. We got to know from a lot of customers that this has made their job much more easier because they no longer have to keep a reminder to manually check on the previous day's revenue or activations. If you have not downloaded it yet, here's

• Community Learning Series | Digest #4 - August 2020

  Dear customers, We hope you're staying safe and healthy. I'm happy to bring you the fourth edition of our #CommunityDigest with some brand-new updates from us. 1. Daily Business Updates (for Android users) The Zoho Subscriptions Android app has got a cool new update: You can now get a push notification to your smartphone that lets you know how many activations and cancellations have taken place, and what's the net revenue for the previous day. The best part is, you can tell the app when exactly you

• Community Learning Series | Digest #3 - July 2020

  Dear customers, We hope you're staying safe and healthy. We're glad to bring you the July edition of our #CommunityDigest. New community members can view our previous newsletters here. This time, we have two major updates and three interesting topics for you: 1. Zoho Subscriptions Developer Community Since the inception of Zoho Subscriptions, our team believed that the recurring billing platform we provide should be able to offer an extensive API library that empowers businesses to automate most

• Introducing: Community Learning Series | Digest #1 - May 2020

  Dear customers, We hope you are staying safe and healthy. Helping businesses manage their customer subscriptions more efficiently has always been, and always will be, our goal at Zoho Subscriptions. We strongly believe this is possible if we grow together as a community and share what we know with each other. To nurture this shared learning experience, here is our brand-new Community Learning Series! ​ Welcome to the first edition of our digest! Each edition of our community digest includes guides

• Recent Topics

• Zoho sheet for desktop

  Hi is zoho sheets available for desktop version for windows

• Tables for Europe Datacenter customers?

  It's been over a year now for the launch of Zoho Tables - and still not available für EU DC customers. When will it be available?

• Guided Conversations - Ticket Creation

  Hi there, Using Guided Conversations to Take Customer Data and apply it into a Support Ticket for internal use, Is there a way to take multiple Textual Variables Inputs (A series of questions), and have the answers all appear in the Description of the

• How to send certain invoices for Approval based on condition?

  To streamline operations, I need the invoices to go for approval when certain conditions are met. For example, if my staff gives a discount of x amount, it must go for approval. If there is no discount, then the invoice will be approved automatically.

• Unable to continue payment

  Hi, I want to make a payment for my email subscription, but I cannot proceed with the payment because my NITKU is invalid. In Indonesia, the NITKU consists of 22 digits, but Zoho only provides 20 digits, causing my NITKU to be invalid. Please help me

• Is there a way to show contact emails in the Account?

  I know I can see the emails I have sent and received on a Contact detail view, but I want to be able to see all the emails that have been sent and received between all an Accounts Contacts on the Account Detail view. That way when I see the Account detail

• Massive spam pretending to come from our address – is this a Zoho security issue?

  Hi, We’ve been receiving more and more suspicious emails lately — many of them clearly look like scams. But yesterday, we got an email that appeared to be sent from our own address, which was very concerning. We're starting to wonder if this might be

• Cant recieve mails

  I’m having an issue with my external IMAP account not fetching any emails into Zoho Mail, even though the connection test says “Success”. I can send, if someone sends an email to me. my original directory (home.pl host) recieves it in their portal but

• Zoho Sheet Autofit Data

  While using Autofit Data function in Zoho Sheets with Devnagri Maratji or Hindi Fonts, a word or a number, it keeps couple of characters outside the right side border.

• Enhancements to finance suite integrations

  Update on the migration (October 28, 2025): Starting this week (October 29 tentatively), we’ll begin migrating Zoho CRM users to Zoho Books as integration users. This means actions will now run under each user’s own Zoho Books access, instead of the admin’s.

• Edit 'my' Notes only

  The permissions around Notes should be more granular, and allow to user to be able to edit the notes he created only. The edit Notes permission is useful as it allows the user to correct any mistakes or add information as needed. However, with this same

• How do I filter contacts by account parameters?

  Need to filter a contact view according to account parameter, eg account type. Without this filter users are overwhelmed with irrelevant contacts. Workaround is to create a custom 'Contact Type' field but this unbearable duplicity as the information already

• Job Alerts for Candidates

  hi All, I have 2 questions relating to sharing job details with candidates. 1. is there a way to notify candidates that meet certain criteria of current jobs available? eg. I run a candidate search, and identify 50 candidates that might be suitable. Can

• Add multiple users to a task

  When I´m assigning a task it is almost always related to more than one person. Practical situation: When a client request some improvement the related department opens the task with the situation and people related to it as the client itself, the salesman

• Enhancing Task Accuracy: Automatically notify the owners upon Task duplication.

  Hello Everyone, A Custom function is a user-written set of code to achieve a specific requirement. Set the required conditions needed as when to trigger using the Workflow rules (be it Tasks / Project) and associate the custom function to it. The requirement

• Show/ hide specific field based on user

  Can someone please help me with a client script to achieve the following? I've already tried a couple of different scripts I've found on here (updating to match my details etc...) but none of them seem to work. No errors flagged in the codes, it just

• Where are Kanban swimlanes

  So i've been playing with Zoho Projects Kanban view a bit more. It appears that task lists are being used as the Kanban columns, which makes sense from the implementation point of view but not the logical one.  Kanban columns are statuses that a task can flow through, while a task list has been a logical way to organize related tasks and relate them to a mislestone. In other words a task in a particular task can go through several stages while remaining in the same task list. After doing some research

• Tip 19: How to display images in Pages using ZML snippets

  Hi folks, We're back with another tip on how to use Zoho Markup Language (ZML) to create interactive pages in Zoho Creator. You can use ZML snippets to add various kinds of components to your pages and structure them in meaningful ways. That's not all, though—using ZML you can ensure your application is automatically compatible with all kinds of devices without any inconsistencies. We often get questions from users about how to invoke Deluge scripts within ZML code. Here's a simple use case for adding

• Can zoho swign format block text spacing automatically when prefilled from zoho crm?

  I'm sending zoho sign template from zoho crm, so that zoho crm pre-populates most fields. I have existing pdf documents that i am having signed. I have no ability to change the pdf documents, they are standardized government forms. The problem I am facing

• Forced Logouts - Daily and More Frequent

  In the last month or so, I've been getting "power logged out" of all of my Zoho apps at least daily, sometimes more frequently. This happens in the same browser session on the same computer, and I need to re-login to each app separately after this happens.

• Zoho Inventory / Finance Suite - Add feature to prevent duplicate values in Item Unit field

  I've noticed that a client has 2 values the same in the Unit field on edit/create Items. This surprised me as why would you have 2 units with the same name. Please consider adding a feature which prevents this as it seems to serve no purpose.

• Reference lookup field values in Client script

  hello all, I'm using a "ZDK.Apps.CRM.Products.searchByCriteria" function call, which is returning the matching records correctly; however, one of the fields is a lookup field which I need the associated data. I believe there is a way to get this data

• In App Auto Refresh/Update Features

  Hi,    I am trying to use Zoho Creator for Restaurant management. While using the android apps, I reliased the apps would not auto refresh if there is new entries i.e new kitchen order ticket (KOT) from other users.   The apps does received notification but would not auto refresh, users required to refresh the apps manually in order to see the new KOT in the apps.    I am wondering why this features is not implemented? Or is this feature being considered to be implemented in the future? With the

• Every time an event is updated, all participants receive an update email. How can I deactivate this?

  Every time an event is updated in Zoho CRM (e.g. change description, link to Lead) every participant of this meeting gets an update email. Another customer noticed this problem years ago in the Japanese community: https://help.zoho.com/portal/ja/community/topic/any-time-an-event-is-updated-on-zohocrm-calendar-it-sends-multiple-invites-to-the-participants-how-do-i-stop-that-from-happening

• How can I filter a field integration?

  Hi,  I have a field integration from CRM "Products" in a form, and I have three product Categories in CRM. I only need to see Products of a category. Thanks for you answers.

• How to implement new online payment gateway?

  Hello, Can you tell me how to proceed to implement my local payment gateway? DIBS has an open avaiable API that should be easy to implement into ZOHO BOOKS. http://tech.dibspayment.com/dibs_payment_window

• Zoho CRM - Portal Users Edit Their Own Account Information

  Hi Community, I'm working on a client portal and it seems like the only I can make the Account record editable to the Contact, is if I add another lookup on the Account to the Contact record. Am I missing something as the account already has a list of

• I’ve noticed that Zoho Sheet currently doesn’t have a feature similar to the QUERY formula in Google Sheets or Power Query in Microsoft Excel.

  These tools are extremely helpful for: Filtering and extracting data using simple SQL-like queries Combining or transforming data from multiple sheets or tables Creating dynamic reports without using complex formulas Having a Query-like function in Zoho

• Connecting Zoho Mail with Apollo.io

  Hi, I am trying to connect my Zoho Mail account with my Apollo.io account to start sending cold email for prospecting purposes. I have activated the IMAP setting but I am still unable to connect to the Apollo account. I am using my email credentials but

• Where does this report come from in the Zoho One ecosystems?

  Is this directly from MA, Analytics or ??? ???

• Contact's title in "Contact Role Mapping"

  When I'm creating a deal, I'd like to see the contacts title in the listing. Right now, I only see this: How can I get the contact's title in there?

• Zoho CRM - Client Portal - Hide Notes Related List

  Hi Community, I'm building a customer portal and I can't find a way to hide the notes related list. I don't want the client to see the notes I have about them. Is there a way to do this as it is no bin/trash icon when I hover over.

• "Pivot Table" Conditional Formatting

  Team, I there a way to use conditional formatting a "Pivot Table"  report? Thanks, Arron Blue Pumpkin Hosting | Solutions Made Simple

• How many clients can be added to Zoho Practice?

  How many clients can be added to Zoho Practice without having their zoho app?

• Stage History

  when viewing a ticket , and you look at stage history tab (kanban view) and look at the stage duration column in days, it shows the current stage of the ticket as " current stage ". Should it not rather show the amount of days it has been in that current

• Send Automated WhatsApp Messages and Leverage the Improved WhatsApp Templates

  Greetings, I hope all of you are doing well. We're excited to announce a major upgrade to Bigin's WhatsApp integration that brings more flexibility, interactivity, and automation to your customer messaging. WhatsApp message automation You can now use

• Automating Ticket Responses Using Zoho Desk's AI Features

  We’re looking to set up an automation within Zoho Desk that can analyze incoming emails or tickets and automatically respond with relevant knowledge base articles based on the content of the request. Could you please guide us on how to configure this

• Optimising CRM-Projects workflows to manage requests, using Forms as an intermediary

  Is it possible to create a workflow between three apps with traceability between them all? We send information from Zoho CRM Deals over to Zoho Projects for project management and execution. We have used a lookup of sorts to create tasks in the past,

• Service locations are tied to contacts?

  Trying the system out. And what I discovered is that it seems that the whole logic of the app is, I'd say, backwards. There is a Customer - a company. The company has contact persons and service locations can be associated with different contact persons.

• Enhancements to Zoho Maps integration tasks

  Hello everyone, We're excited to announce enhancements to the Zoho Maps integration tasks in Deluge, which will boost its performance. This post will walk you through the upcoming changes, explain why we're making them, and detail the steps you need to

• Next Page