You can apply a credit balance in a single payment or use a payment run to automate the process.
Apply a credit balance to a future invoice
A Credit Balances represents money that you owe your customer. It is possible to refund this credit balance if your customer makes that request. As a best practice, Zuora recommends that you apply the credit balance to future invoices, where the invoice picklist will show maximum limit invoices. Please note: Depending on your business practices, you may need to inform your customer of this policy.
Apply a credit balance in a payment run
As part of a payment run, Zuora provides the ability to automatically apply the credit balance before attempting a payment. By selecting this option, the payment run will apply the credit balance to the invoice as the first step of the payment run.
When creating a payment run, select Apply Credit Balance to the invoice before attempting payment. This attempts to apply a credit balance amount to the outstanding invoices before charging for payment using an electronic payment method. The target date of the payment run must be on or before the date when the payment run is executed. Otherwise, the invoice might be charged by using an electronic payment method rather than by applying the credit balance. For example, if the payment run is executed on September 2 but you set the target date of the payment run to September 3, the credit balance amount might not be applied to the invoice.
If a billing account has a credit balance, the credit balance will be applied towards open invoices before charging the electronic payment method for any remaining balance. This is similar to "Balance Forward" billing.
If the credit balance is greater than the invoice balance, the payment run will apply an amount equal to the invoice balance.
If the credit balance is less than the invoice balance, the full amount of the credit balance will be applied and then the payment run will attempt a payment for the remaining invoice balance.
Apply a credit balance in a single payment
To apply a credit balance in a single payment:
- Open the customer account detail page.
- Scroll down to the Transactions section.
- Select the Credit Balance tab, then click Apply Credit Balance.
- Apply the credit balance as a payment against an invoice. Select an invoice in the Invoice field and enter the amount in the Amount to Apply field.
- Click Apply Credit Balance to Invoice.
Apply a credit balance without payment runs
When your customer sends you a payment for an amount over than the invoice, that's an overpayment. There are lots of reasons why a customer will send an overpayment ranging from a simple mistake to forgetting that they paid via an electronic method.
The Credit Balances feature can be used to store the overpayment so you can apply it to a future invoice or refund it to the customer. There is even a feature to automatically apply the credit balance automatically as part of the payment run so you can use the credit balance before processing an electronic payment.
It would be good if you could process electronic payments. If you don't use electronic payments, see the following section.
Use the Zuora API
Zuora's payment run will automatically apply the credit balance to an invoice balance before attempting an electronic payment with the gateway.
If you don't use Zuora's payment runs, you can still apply the credit balance with APIs.
As a best practice, these APIs should be called before sending invoices to customers so that the invoice you send will have any credit balance applied. If you choose to apply the credit balance after sending the invoice to the customer, the customer will not know that the credit balance is applied to this invoice.
From the data source API, you can query the invoice data source for accounts with a total invoice balance greater than zero AND a credit balance greater than zero AND an invoice with an invoice balance greater than zero. This query will yield an open invoice for any customer with a credit balance. For more information about the APIs, see Zuora API documentation.
You can then call the Create a Credit Balance Adjustment API to apply the credit balance to the invoice balance. From the initial data source query, you will get all invoices with open balances, so you can choose to apply the credit balance to the invoice of your choosing. It is a best practice to apply the credit balance to the oldest invoice first.
When applying the credit balance, It is recommended that you consider the use case where your credit balance is greater than your invoice balance:
- If the credit balance is greater than the invoice balance, apply the invoice balance amount
- If the credit balance is less than the invoice balance, apply the full credit balance
Now that the credit balance is applied, you can send invoices as appropriate.