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

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.


InfoThey 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.


Idea
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.

 

Notes
Up Next: Setting the Right Payment Terms 


    • 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

      • E-Invoicing in Belgium with Zoho Books

        Starting January 1, 2026, Belgium is introducing mandatory electronic invoices (e-invoicing) for all B2B transactions between VAT-registered businesses. This means that invoices and credits notes must be exchanged in a prescribed digital format. How E-Invoicing

      • Lead Blueprint transition in custom list view

        Hi, Is It possible to insert the Blueprint transition label in a custom Canvas list view? I am using Lead module. I see the status, but it would be great if our users could execute the Blueprint right from the list view without having to enter the detailed

      • Announcing new features in Trident for Mac (1.30.0)

        Hello everyone! We’re excited to introduce the latest updates to Trident, bringing you a more seamless, intuitive, and secure communication experience. Let’s take a quick look at what’s new. Work with PST/EML files more efficiently. You can now do more

      • Open Form in Same window as Page from embedded Report

        I have a page that has an embedded report, as shown below. When I click the + sign to add a new record, the form shows up inside the page where the report was embedded. I know that I can add a custom action to the report grid or report detail view and

      • Weekly Sales Summary

        Is it possible to generate a weekly report in Zoho Books to show -$$ amount of estimates generated -# of estimates generated by Salesperson -$$ amount of Sales Orders created -$$ amount of Invoices generated

      • Pricing Strategies: #4 Counting on Discounts

        "Is there any chance I can get a little discount on this month's service?" Maya hears this almost every time at her fitness studio. She offers monthly subscription plans for various services, including yoga, strength training, wellness sessions, and personal

      • Introducing Query Workbench in Zoho CRM

        Hello everyone! We’re excited to announce the Query Workbench, a brand-new interface designed to improve developer experience of building Queries in Zoho CRM faster, simpler, and more intuitive. In the past, constructing queries required navigating across

      • Limitation with Dynamic Email Attachment Capture

        I've discovered a flaw in how Zoho Creator handles email attachments when using the Email-to-Form feature, and I'm hoping the Zoho team can address this in a future update. The Issue According to the official documentation, capturing email attachments

      • Add Customer in Books on Creator Form Submit Params

        Hi guys, Were integrating a creator app with books however what were doing is adding a books customer on submit of creator form.  We have some parameters but some fields aren't coping, All were seeing is the contact name in books,.  Any help of the params for this would be great. below is a sample of the script... response = zoho.books.createRecord("contacts", "XXXXXXXXX", { "contact_name" : input.Name, "address" : input.Email }); 

      • Admin asked me for Backend Details when I wanted to verify my ZeptoMail Account

        Please provide the backend details where you will be adding the SMTP/API information of ZeptoMail Who knows what this means?

      • Suggestion : link KB with Accounts

        Hi Zoho teams.  I think it could be good to link KB articles with  : accounts in order to easily  find articles dedicated to some account specificities. I tried to use tags , but tags are free text with not easy way  to retrieve it directly from ticket or list article for one tag. Tickets : It would be a good way to measure usage of KB directly from ticket when we don't need to copy/paste KB in solution. And : Great Tool , keep going ! 

      • Drag and Drop in Creator Application

        Hi, I am in the planning phase of a new application and I would like to use 'Drag and Drop' in the user interface of my new Creator application that I am sketching out, but I don't seem to be able to find any reference that this is available to developers. In my instance I have table of entries and I would like to be able to allow users to move an entry to another table (much like you do in your own interface when creating a Pivot Table report. In addition, I would like the user to be able to re-order

      • Is there any way to integrate Zoho with Zapier?

        Is there any way to integrate Zoho with Zapier? I'd like to use it to create a workflow, sharing posts from our Wordpress website to all our channels.

      • Popular Articles Report

        From data to decisions: A deep dive into ticketing system reports Content management teams can use various metrics to assess the effectiveness of knowledge base articles, improve content quality, and ensure articles are regularly updated. Predefined article

      • Invoice Ref. Field

        Hello Team, Currently, the Invoice Ref. field is set to a Number type with a maximum limit of 9 digits. However, we often receive customer invoices that contain up to 12 digits. In some cases, the invoice reference includes not only numbers but also letters

      • 60 Days Into Zoho - Tiktok Branding Startup -7 Questions?!

        Wsp Everybody I co-own a TikTok Branding / Consulting Startup & have been using Zoho for the past 60 days - Am now looking to make our overall operations & processes more Efficient & Effective! Curious to know how others are using the platform & what's

      • Turning off the new UI

        Tried the new 'enhanced' UI and actively dislike it. Anyone know how to revert back?

      • XML format to import knowledgebase into Zoho Desk

        Hi, We just started to use Zoho Desk and want to import our knowledgebase from our old support system (Freshdesk) to Zoho Desk. Can anyone give us information about the format of xml file to import? There is no explanation on the related page.

      • Pushing Zoho People leave into Microsoft calendar: how to chose how "event" is shown (busy, free etc)

        Hi, how can I select how a "leave" event is pushed into Microsoft calendar? I want for leave "working elsewhere" to show as working elsewhere and NOT as busy.

      • Duplicate Accounts

        Hi There, I am looking for a solution, script, workflow or anything to solve an issue we have - in our customers section we have a rule that doesn't allow duplicates, however Zoho will allow customers with xxxxx and xxxxx PLC or LTD so effectivley we

      • Error with If formula

        I've got this super simple If formula, what is the reason for the error? If ( LEN(${Leads.Trial Slot Option}) == 3,'y','n') Syntax Error. Check the examples for any functions you're using to see if you formatted them correctly. Make sure your fields are

      • Announcing Multi-language Support in Zoho FSM

        Zoho FSM now speaks your language. The much-awaited multi-language support is now available in Zoho FSM. The following languages are supported in Zoho FSM: Dutch (Nederlands) English - United Kingdom English - United States French (français) French -

      • Creating multiple CRM leads from a Zoho Forms subform

        Hi all, We have a heavily used intake form that is used for new leads as a part of our intake. There is a subform that allows the lead to add additional team members, their titles and other basic info. That form submission creates a new Lead and the subform

      • Free webinar! Build smarter apps with Zoho Sign and Zoho Creator

        Hello, Bring the power of digital signatures to the apps you build in Zoho Creator! Connect Zoho Sign as a microservice and enable seamless e-signature workflows in your applications. This integration allows you to automate signing tasks using Deluge.

      • Restrict Addresses in Zoho Forms?

        In the address field, is there a way to restrict the addresses that auto populate (via Zoho Maps or Google Maps) to a specific state (I know it's possible with the country). Additionally, how often does the address in Zoho Maps get updated? Certain addresses

      • Zoho Tracking Image location

        So we've been having an issue with tracking email opens. Specifically in Gmail. Our emails are not that long either, maybe 4 sections of image/250 characters of text/button per section.  But all my test accounts I used via Gmail we're showing opens. But then come to find out the tracking image is at the very bottom of the email. So If the message is clipped (It always just clips our social icons on the bottom) and the user doesn't click the show more button it never tracks the open.  Looking at other

      • Weekly Tips: Secure your attachment downloads with Zoho Mail

        Safety is one of our main concerns, whether it’s about device security or online protection. We use tools like fingerprint scanners, facial recognition, and two-factor authentication to keep our devices and email accounts secure. We use methods like OTP

      • Resume Harvester: New Enhancements for Faster Sourcing

        We’re excited to share a set of enhancements to Resume Harvester that make sourcing faster and more flexible. These updates help you cut down on repetitive steps, manage auto searches more efficiently, and review candidate profiles with ease. Why we built

      • Looking for best practices to import data from SAP Business One (on-prem) into Zoho Analytics via Zoho DataPrep / Databridge — daily automated schedule

        Hi all, I’m using SAP Business One on-prem (SQL Server / or HANA — depending on DB backend) as our ERP. I want to build a pipeline that, every morning at 9:00 AM IST: pulls transactional data (invoices, customers, products, stock, etc.) from SAP B1, loads

      • Zoho One Unified Portal - Applications

        Hello, It is great to see the work on the New Unified Customer Portal. Thanks for that. The number of applications is limited though. It is now only around the Zoho Books ecosystem (Books, Expense...) and Zoho Social. = Are other applications planned

      • Marketing Tip #10: Start a customer loyalty program

        Winning a new customer is great, but keeping them coming back is even better. A loyalty program rewards repeat buyers with points, giving them more reasons to shop again. Over time, this builds trust and long-term relationships. Try this today: Set up

      • Zia Actions: AI-powered Workflow Automation for Faster and Smarter Execution

        Hello everyone, Updated on 12th Dec 2025 Zia actions for Workflow is available for Enterprise edition ONLY. These features are currently available in the following DCs: US, CA, EU, IN, and AU Email Auto reply and Content Generation are available as Early

      • Unable to access my Zoho forms account

        For some days now, I haven't had access to my Zoho Forms account. I keep getting an error that says, "You are an inactive user in your organization" via the mobile app and "You don't have permission to access this organization" via the web. I was removed

      • Do Individual Forums within Categories, in Desk Community, Produce Their Own RSS Feed?

        Do Individual Forums within Categories, in Desk Community, Produce Their Own RSS Feed? If not, can anyone share a work-around that could help me get an RSS feed for individual category forums?

      • Change Last Name to not required in Leads

        I would like to upload 500 target companies as leads but I don't yet have contact people for them. Can you enable the option for me to turn this requirement off to need a Second Name? Moderation update (10-Jun-23): As we explore potential solutions for

      • Resend Client Portal Invitation + View Email Delivery Status

        Hi Zoho Team, We hope you are doing well. We would like to request two important enhancements related to the Zoho Creator Client Portal invitation process. At the moment, when we add a user to the Client Portal, Zoho Creator automatically sends an invitation

      • Get user last login

        1. Is there a way to programmatically get the last user login to trigger certain workflows? 2. Is there a way to programmatically access the custom fields on a user's account?

      • Seeking Zoho Creator Expert (Delivery Management App / Logistics Ops) — Built & Deployed Before

        Hi everyone, We’re building a Delivery Management App (focused on delivery operations for now) using Zoho Creator. We’re looking for a Zoho Creator expert who has already developed and deployed a similar delivery/workflow system and can assist us with

      • Automating Employee Birthday Notifications in Zoho Cliq

        Have you ever missed a birthday and felt like the office Grinch? Fear not, the Cliq Developer Platform has got your back! With Zoho Cliq's Schedulers, you can be the office party-cipant who never forgets a single cake, balloon, or awkward rendition of

      • Adding Multiple Files to a Zoho Vault Entry

        There is a old blog post talking about adding multiple file attachments to one Zoho Vault Secret: https://www.zoho.com/blog/vault/introducing-new-features-in-zoho-vault-powerful-password-sharing-wider-storing.html Is that still possible, I can see how

      • Next Page