What is the best way to Credit a Customers account?

kitking

Currently the only way I can think of is to make a invoice with a negative balance but that just seams messy and hard to track is there a better way to do it?

digibandit

Title:
How to properly credit a customer's account for future use?

Description:
I need to apply a credit to a customer's account that they can use toward future invoices. Currently, I'm creating invoices with negative balances, but this approach feels disorganized and makes tracking difficult.

What's the recommended method for:

Adding account credits that customers can apply to future orders
Maintaining clear records of credit balances and usage
Ensuring credits are easily accessible during checkout/invoicing

I'm looking for a cleaner solution than negative invoices that will provide better visibility and management of customer credit balances.

johnny

As an MSP you don't typically offer credits but being a repair shop I can see where that may tie in. There is no credit system currently and would be a massive amount of work as it touches all the financial code. Deff planned though. Although the negative invoice is interesting never thought of that, maybe theres an easier way to implement this then I think there is.

digibandit

johnny As an MSP, I absolutely use account credits - both time and money based. Each month my clients get hours added to their account. They consume those hours when they request additional support, and once they're out of prepaid hours, we bill them directly. If we end up billing them 3 months in a row, we increase their prepaid hour allocation until the billing stops or the clients financial department deals with the staff that is abusing our chat. With that said, yes, this is specific to the break/fix side of my business, but the same stands.

We handle this through the customer's account balance feature. In our previous PSA, we had both time tracking and account credit functions working together seamlessly and it was a beautiful thing for automated billing and tracking.

johnny

I totally get it This is deff something that has been requested quite a bit.

So ill shift my focus to credits on next months release. I have to figure out a way to tie it all together without affecting financial reports and categorization, taxes etc, but still I gotta focus on this release as its already a little overdue, due to the new payment provider integration taking much longer than expected. There will be a ton of little quality of life updates throughout this release including the ability to add credit card on behalf of a client and multiple saved payments. This will also help with the foundation for credits as well.

digibandit

johnny totally understandable! From what I can tell, you're doing absolutely amazing!

wrongecho

I have sunk a few hours into trying to build out credits/pre-paid hours already without much success. It has been requested many times on the forum but seems quite complex to get right.

The idea seems easy enough at first until you actually start writing the code and realise there are so many different workflows you have to plan for: "How do I track credits? How are they charged? Should they be charged automatically every month? Do they expire? How do I track and show when this credit is applied/used? Do they apply automatically? What exactly am I tracking vs applying here - If I'm tracking 1 hour, is that to be deducted from time tracking on an invoice (linked ticket) or do we take the hourly rate off the invoice total? What happens if the hourly rate changes? How do we reverse the credit?". And so on, and so forth.

wrongecho

digibandit Re credits: wrongecho

litechforce

wrongecho

Right now, I have a product for a "Block of Hours" that customers can purchase. I then track it monthly to see how many hours they've used. If they're over, they get a separate invoice with the balance they owe. If they're under, there's no rollover, it's just under. Not refundable either.

Something that can keep track of that automatically so I don't have to (don't need to look at a report, etc.) would be helpful if possible.

Just my 2 cents on it.

wrongecho

litechforce

So customers buy hours from you. How are you crediting / taking away those hours from invoices?

i.e. Client A buys one hour for their hourly rate of £100, the invoice is £150. You're recording hours, so do you just take £150 away from the invoice?

What happens if you change Client A's hourly rate?

How do you track this for Client B, that has a different hourly rate?

As for the no-rollover and no refunds, this is fine for your use case but I think the community would (rightly) demand these features.

digibandit

@wrongecho I know this isn't a direct reply to your question, but I'm confused about the complexity you're describing.

The way I see it, we'd have two systems: Money + Time

Both work the same way - you can add (purchase, credit) or remove (spend, refund).

Both would use existing itflow functionality: products, quotes, payments, etc.

Money credits: Customer overpays invoice by $100 = $100 credit. Next invoice for $150 applies the $100 credit, customer pays $50.

Time credits: Customer buys "10 Support Hours" product = 10 hours added to balance. We log 3 hours of work = 7 hours remaining, bill normally for any additional time.

Going over balance:

Money credits: Customer has $50 credit, invoice is $100. Apply the $50 credit, customer owes $50.

Time credits: Customer has 2 hours remaining, we do 5 hours of work. Use the 2 prepaid hours, bill 3 hours at their regular rate.

Real example: I have a client with "Boots on Ground - 5 Hours Monthly" for $240/month, $120/hour overage. They need 6 hours in one month:

- Invoice shows: 6 hours charged

- Invoice shows: 5 hours account balance used

- Invoice shows: 1 hour remaining at $120

Other uses:

- Money-to-time conversion: Customer has $500 credit, wants to convert to prepaid hours with incentive pricing

- Repair shop credits: Donate old equipment, get account credit for refurbish value

- Incentive hours: "You used 60 hours of Outlook support over 6 months. Here's 6 hours of strategic planning time to fix the root cause."

What makes this complex? I assume I'm missing something.

wrongecho

digibandit

The way I see it, we'd have two systems: Money + Time

This is what I'd like to avoid if at all possible because it's going to make billing even more complex.

Quotes and invoices do not currently have a concept of time, only money. There's no native concept of hours here; when you add time from a ticket you're just adding a line item for the hourly rate multiplied by the number of hours logged. So this was why I'm trying to understand how people would expect "pre-paid hours" to be deduced from the invoice total.

digibandit

I think the solution might be simpler than we're making it - hear me out on this rabbit hole...

What if we treat time exactly like any other product using the existing invoice system?

1 QTY = 1 Hour | +qty = add time / -qty = deduct time

1.0 qty = 1 hour
0.5 qty = 30 minutes
0.25 qty = 15 minutes
2.5 qty = 2 hours 30 minutes

Example flow:

Customer buys "10 Hour Support Block" → Invoice line item with +10 qty → Adds 10 hours to their balance
We do 2.5 hours of work → Invoice line item with -2.5 qty → Deducts from balance (or charges if no balance)

The invoice logic handles everything:

Customer has 10 hours banked
We log 2.5 hours of work (qty -2.5)
System checks: Do they have hours? Yes → deduct from balance, $0 charge
If they only had 2 hours left → deduct 2 hours, charge for 0.5 hours at their rate

This follows my desired flow where products become assets assigned to customers that we can then provide billable services against and left over time is a conversion tool for additional work.

wrongecho

digibandit

What if we treat time exactly like any other product using the existing invoice system?

We kinda do, this is the problem.

You cannot deduct hours from a $ bill without defining what each hour is $ terms. That is where my queries spawn from.

System checks: Do they have hours? Yes → deduct from balance, $0 charge

If they only had 2 hours left → deduct 2 hours, charge for 0.5 hours at their rate

Because we treat hours as just another line item, we have no way of doing this. We can't programically tell the difference between 5xLaptops or 5xHourly rate to "just deduct 2 hours".

I was chatting with Johnny last night and he mentioned he has already been working on a credit system so I will refrain from commenting further until I take a look at his code; it's possible he's already worked out a lot of this logic.

digibandit

wrongecho

wrongecho We kinda do, this is the problem.

Oh lol

wrongecho I was chatting with Johnny last night and he mentioned he has already been working on a credit system so I will refrain from commenting further until I take a look at his code; it's possible he's already worked out a lot of this logic.

Ditto!

Bigbug

How about we stick with money? at the end everything boils down to money, time = money

So let's say in credits it should be represented with money but also have a name like '1 hour support' you can kinda borrow this idea from products

Time in your business doesn't have any value unless it gets you money.

digibandit

SyncroMSP - Has separate "Retainer Hours" and "Account Credits" because they serve different purposes. Hours track service delivery, credits handle financial adjustments. Their documentation specifically shows how retainer hours are tracked separately from account credits.

ConnectWise Manage - Their "Block Hour Agreements" are completely separate from monetary credits. Their agreement types documentation shows distinct handling for "Block Hours" vs credit additions. Why? Because forcing time through money conversion breaks when rates change or when you need clear hour consumption reporting.

Autotask PSA - Their contract documentation shows parallel ledgers for "Prepaid Time" and "Prepaid Money" that never mix until final billing. They learned this lesson after years of MSP feedback.

HaloPSA - Prepaid hours stored as actual time units (not dollar equivalents) with separate money credits. Their billing guide explicitly discusses how "prepaid hours" and "account credits" are distinct features.

Examples:

Monthly Hour Allocations: Client gets 5 hours/month included. These aren't "$500 worth of time" - they're 5 HOURS. When my rate increases next year, they still get 5 hours, not $500 worth at the new rate. ConnectWise's block hour documentation confirms this is standard practice.
Incentive Hours: "You burned 60 hours on Outlook issues. Here's 6 hours of strategic planning to fix the root cause." This isn't a monetary credit - it's specifically TIME for a specific purpose.
Different Rate Services: Client has prepaid hours. Regular support is $100/hr, emergency is $150/hr. With time tracking, 1 emergency hour consumes 1 hour. With money-only, now I need complex conversion rules. SyncroMSP's retainer documentation addresses this exact scenario.
Clear Client Communication: Clients understand "You have 8.5 hours remaining" much better than "You have $850 credit (assuming current rates)."

While "time = money" sounds logical, it breaks down in practice:

What happens when rates change mid-contract?
How do you report on actual time consumption vs monetary value?
How do you handle different billing rates for the same client?
How do you clearly show clients their remaining SERVICE TIME vs account credits?

MSP industry reports consistently show that successful MSPs use hybrid billing models with both time and monetary tracking.

@wrongecho raised valid complexity concerns, but the complexity comes from trying to force everything through one system, not from having two parallel systems. Every successful PSA has already solved this by keeping them separate.

@johnny - I strongly encourage implementing both from the start. The "massive amount of work" will be even more massive if you build money-only first and then try to retrofit time tracking later. The financial code is already complex - adding time as a parallel system is actually cleaner than trying to force time through monetary conversions.

Look at how our competitors handle this - there's a reason they ALL ended up with dual systems. Kaseya's BMS and N-able's N-sight also maintain separate time and money credits. Let's learn from their evolution rather than repeat it.

For additional context, the CompTIA MSP Guidebook recommends maintaining distinct tracking for prepaid services (time) vs financial credits (money) for compliance and clarity reasons.

wrongecho

digibandit

I must admit I do find it funny you initially couldn't understand my confusion yet now ask the same questions I did! 🙂

johnny

yes basically when you create an invoice you can link it to credit and you can use anything you want for product example Prepaid Support [Hourly] QTY .25 with an invoice category of your choosing for reporting like Prepaid Credit or something of that nature

You can also add credit without an invoice

This will all be available in the next release

digibandit

johnny I'm stoked for this, i'll keep barking up the time accounting tree lol

digibandit

wrongecho you have all been at this long before I have showed up, it's going to take me some time to get caught up. Until then, I'll dunning-kruger all over the place with reckless abandon lol