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 



      Zoho Campaigns Resources


        • Desk Community Learning Series


        • Digest


        • Functions


        • Meetups


        • Kbase


        • Resources


        • Glossary


        • Desk Marketplace


        • MVP Corner


        • Word of the Day


        • Ask the Experts


          • 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

          Zoho CRM Plus Resources

            Zoho Books Resources


              Zoho Subscriptions Resources

                Zoho Projects Resources


                  Zoho Sprints Resources


                    Zoho Orchestly Resources


                      Zoho Creator Resources


                        Zoho WorkDrive Resources



                          Zoho CRM Resources

                          • CRM Community Learning Series

                            CRM Community Learning Series


                          • Tips

                            Tips

                          • Functions

                            Functions

                          • Meetups

                            Meetups

                          • Kbase

                            Kbase

                          • Resources

                            Resources

                          • Digest

                            Digest

                          • CRM Marketplace

                            CRM Marketplace

                          • MVP Corner

                            MVP Corner




                            Zoho Writer Writer

                            Get Started. Write Away!

                            Writer is a powerful online word processor, designed for collaborative work.

                              Zoho CRM コンテンツ






                                ご検討中の方

                                  • Recent Topics

                                  • Experience with Zoho Vertical Studio

                                    I'm considering Zoho Vertical and would love to hear from some devs who've been using it. The Zoho ecosystem is pretty solid, so I assume the experience has been pretty good, but sometimes Zoho has its quirks. Overall, has your experience been positive?
                                  • LinkedIn Chrome Extension

                                    Hello - I believe it is a known issue that the LinkedIn extension Resume Extractor has stopped working and they are working on potential fixes. Wondering how others users are finding this issue and if there are any better workarounds for this issue? It
                                  • Advance PDF creation from CRM data

                                    I'm trying to create a PDF export of data in the CRM. My problem is I want a pretty complicated format for the data. I'm trying to export multiple modules worth of data, with nested one-to-many relationships between the modules. Along with that, I want
                                  • Sub-Form Padding in CSV Export

                                    Hi, When you use the Sub-Form, and for example you have a Date Field on the Main Page, then Option 1 and Option 2 fields on the Subform, when you export this to CSV the Date column will only have the Date in 1 row, the first row, it would be nice to pad
                                  • More Formula Functions

                                    Hi, I would like for example to be able to have a Date Field and Formula Fields, and then in the Formula Fields I would like to grab just the Month of the above Date Field or the Week Number of the above Date Field. So more "Functions" than the current
                                  • File upload size limits

                                    I am designing a contact form in Zoho Creator with File upload facility. I am not sure where and how to set the following properties for the same: Allowed File Types Maximum Size of the Attachment Number of Attachments
                                  • Composite Services and Account Tracking

                                    I am looking to garner support/request the ability to make composite services. A quick search in the forums brings up multiple requests for this feature. I fail to see why an item is mandatory while services are optional. I also would like to see the
                                  • All operation codes getting Not applied in WO-TT22J1025WOR0471, SR-TT22J1025PRE0423,FOR VIN-W1K6G2AB2SL005130.

                                    Dear Support Team, Please refer attached screenshot. All operation codes getting not applied in work order. Request you to please check and update ASAP.
                                  • Exclude Segment from Campaign Recipients

                                    I've created two Segments in order to separate Non-Marketing Contacts from Marketing Contacts. I'd like to send an Eblast to all Marketing contacts in my lists, but when I go to select Recipients, I have two options: 1. To Choose Lists to Send to; 2.
                                  • Reschedule Multiple/Mass Calls at Once

                                    When we go into a Call record, we have the option to "Reschedule Call." How can we select multiple Calls at once from the Activities tab and Reschedule them? The big use case for us: We have many leads that our reps are supposed to call on a daily basis.
                                  • Option to Empty Entire Mailbox or Folder in Zoho Mail

                                    Hello Zoho Mail Team, How are you? We would like to request an enhancement to Zoho Mail that would allow administrators and users to quickly clear out entire folders or mailboxes, including shared mailboxes. Current Limitation: At present, Zoho Mail only
                                  • I want to Make the due date of the project appears automatically

                                    hello everyone I want to know if the zoho projects app can add automatically the END DATE of the project I added the duration, start after dates of each tasks in the project template & the starting date of the project itself and the end date of it doesn't
                                  • Drag 'n' Drop Fields to a Sub-Form and "Move Field To" Option

                                    Hi, I would like to be able to move fields from the Main Page to a Sub-Form or from a Sub-Form to either the Main Page or another Sub-Form. Today if you change the design you have to delete and recreate every field, not just move them. Would be nice to
                                  • Deluge Tips & Tricks: Mastering dates and times

                                    Hello everyone! We're bringing back our Deluge Tips & Tricks series, where we show you how to make the most of Deluge for achieving a wide range of use cases. Working with dates and times is a fundamental part of almost any business application. Whether
                                  • Adding a Button in a Form in Zoho Creator App

                                    Hi I want to know how can I add a Button in Zoho Creator form. I have options that I select from a multiselect options and I want the button to add those selected options in a Subform. I do not want to add on a Page Builder I want it inside a specific
                                  • Internal Exception for Creator function

                                    I have been running a script successfully for several days using the scheduler in my application. Now today it suddenly creates and Internal Exception error. Nothing has changed about the script. The data is still retrievable from the web service it is using. Why would this suddenly be happening for no apparent reason? Also noticed that my usage logs are not up to date. Is something changing behind the scenes?
                                  • How to Set Up a Custom Domain and Customize Homepage

                                    Hello, I am experimenting with Zoho Creator to build applications for my own use case and have encountered a couple of issues: 1. Custom Domain Access: Is it possible to access my Zoho Creator application through a domain that I own? If so, how does the
                                  • Announcing new features in Trident for Mac (1.26.0)

                                    Hello everyone! Trident for macOS (v1.26.0) is here with new updates to securely manage your passwords, locally save your emails, and protect against emails with suspicious URLs. Let's take a quick look at them. Manage passwords with Zoho Vault eWidget.
                                  • Default Value on a Number

                                    Hi, I would be nice to also be able to set the Default Value for a Number Field, not just the Initial Value shown, so if not on the screen so not enetred it can have a value of 0 for example. Thanks Dan
                                  • Having trouble fetching contents of Zoho Connect Feeds using the API, requesting alternative API documentation.

                                    I'm trying to retrieve feed/post data from Zoho Connect using the API but facing challenges with the current documentation. What I've tried: OAuth authentication is working correctly (getting 200 OK responses) Tested multiple endpoints: /pulse/nativeapi/v2/feeds,
                                  • Tip#45: Custom Tags and Cluster Tags

                                    Tagging your work items helps categorize and label work items within your Zoho Sprints workspace. Now, this feature is expanded across multiple modules, along with the introduction of cluster tags that offer an advanced tagging mechanism. Manage Tags
                                  • Extensions 101 webinar series: Build, integrate, and monetize with extensions

                                    Attention developers! Are you ready to take your extension development skills to the next level? We're excited to bring back the Extensions 101 webinar series with an expanded lineup of Zoho products and an introduction to more platform features. Last
                                  • [Free Webinar] User Management in Zoho Creator - Creator Tech Connect

                                    Hello Everyone! We welcome you all to the upcoming free webinar on the Creator Tech Connect Series. The Creator Tech Connect series is a free monthly webinar that runs for around 45 minutes. It comprises technical sessions in which we delve deep into
                                  • A couple of minor enhancements to Workflows

                                    Last updated on September 17, 2024: These enhancements were initially available for early access, and we've now enabled them for all users. We are elated to announce a couple of enhancements to custom functions in our Workflows! Say hello to: "Source"
                                  • Business Continuity - Disaster Recovery

                                    I know about the Zoho CRM backup .zip files, however, this doesn't include any of the infrastructure with like custom fields or custom modules. I am curious on what everyone has in place for a true backup or what your plan is if your Zoho instance were
                                  • Narrative 11: Are your customers happy?

                                    Behind the scenes of a successful ticketing system: BTS Series Narrative 11: Are your customers happy? Happiness isn't just something you experience; it's something you remember. Hear your customers' voices by enabling customer happiness ratings in Zoho
                                  • Don't understand INVALID_REQUEST_METHOD when I try to post up an attachment

                                    When I make the POST request (using python requests.post() for files): https://www.zohoapis.com/crm/v8/Calls/***************01/Attachments I get this response: r:{ "code": "INVALID_REQUEST_METHOD", "details": {}, "message": "The http request method type
                                  • Signature field is showing black

                                    Hello, When customer signed the service form, it is showing as below picture Phone model: iPhone 16 Pro We tried delete and install application, but it not solved. This has on phone of a few person. There is any advice to solve this?
                                  • Zoho CRM Android app updates: record sharing, user image upload, Zoho Survey integration, and more

                                    Hello everyone, We've made some important improvements to Zoho CRM's Android app, and we'd like to walk you through the latest updates. Here's what's new: Record sharing with org users User image upload Zoho Survey integration support Venue preference
                                  • How to Delete/hide Google adwords section from Layout?

                                    Hi people, maybe someone can tell me how to remove or hide the Google adwords section from my layout? Im not using it and it takes too much space.
                                  • WIDGET in related record list ZOHO CRM; how to get and put data to subform custom fields?

                                    he need: Read and write two custom subform line-item fields on Quotes: Segment_wyceny (picklist/text) and W_pakiecie (number). Write works; read does not return these fields via SDK. Environment Zoho CRM Widget Zoho Embedded App SDK v1.2 Module: Quotes
                                  • Introducing Assemblies and Kits in Zoho Inventory

                                    Hello customers, We’re excited to share a major revamp to Zoho Inventory that brings both clarity and flexibility to your inventory management experience! Presenting Assemblies and Kits We’re thrilled to introduce Assemblies and Kits, which replaces the
                                  • Way to update CRM records in quik view

                                    I have custom module in zoho crm and that module have 500 records. I want a quick way or UI so that user can easily update the record information in quick view without going to record detail view or edit view. I tried zoho sheet option but in zoho sheet
                                  • Writer sing up problom

                                    Zoho writer sing up prolom face
                                  • Where to integrate Price Book and Product List Price

                                    Hello, We sync zoho crm all modules with all data to zoho analytics. In zoho crm, we have "Price Books" and "Products" modules, where each product is assigned to a few price books with different list prices. From zoho crm, I am able to export a dataset
                                  • Form / CRM Integration Not entering into workflow

                                    I have a simple form setup with company name, first name, last name and lead source. Each of the fields are mapped to CRM Leads module. When the form is submitted, the lead is populated properly. I also have a workflow created that when the lead source
                                  • Automating CRM backup storage?

                                    Hi there, We've recently set up automatic backups for our Zoho CRM account. We were hoping that the backup functionality would not require any manual work on our end, but it seems that we are always required to download the backups ourselves, store them,
                                  • Zoho Slowness - Workarounds

                                    Hi all, We've been having intermittent slowness and Zoho just asks for same stuff each time but never fix it. It usually just goes away on it's own after a couple weeks. Given that speed is a very important thing for companies to be able to keep up with
                                  • Don't understand why Forms Mobile Scan and Fill not working

                                    I have configure enabled mobile scan and fill, I have enabled QR and Bar code on two fields name and position, I have mapped seq 1 to Name and seq 2 to position, I have created a 2d QR code with the person names and position, seperated by a comma. When
                                  • Recurring Supervisor Rule Reminders for Open/In-Progress Tickets

                                    Hello Zoho Support Team, I would like to suggest a potential improvement regarding reminders for tickets and activities in Zoho Desk. Currently, it is possible to set reminders only once. In the Supervisor Rules section, it is possible to configure reminders
                                  • Next Page