Credit memos

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A credit memo is a standalone billing document that reduces what a customer owes. It works like an invoice in structure—its own document number, lifecycle, and PDF template—but records a credit instead of a charge.

On marketplaces using the next-generation (V2) billing architecture, credit memos replace negative invoices, which were previously used for refunds, downgrades, and other negative balances. Credit memos provide clearer audit trails, dedicated list and detail pages, and flexible application rules.

📝 Note: Credit memos are enabled by default for marketplaces on billing pipeline V2. Marketplaces on billing V1 should contact your AppDirect technical representative to discuss migration or enablement.

Credit memos are issued when billing produces a credit—for example after a subscription downgrade, a refund, negative metered usage, a one-off order correction, or an ad hoc goodwill adjustment. Each memo is addressed to the party that paid the original invoice, whether that is an end customer or a reseller under your marketplace’s billing relationship. After a credit memo is created, you can apply it toward outstanding or future invoices for that same customer, or pay the full amount back to the original payment method.

For instance, when a downgrade generates a negative charge, the platform issues a credit memo instead of posting a negative balance on an invoice. That credit can later offset a future invoice.

📝 Note: Credit memos record and apply credit against invoices. To return funds to a customer, process a refund from the Payments page. See Refund payments.

Key capabilities

Compliant credit handling

Each credit memo is a first-class billing record with its own document number, status, and PDF output. Numbering and prefixes can be configured separately from invoices on the Invoice & Credit Memo settings page, so credit documents follow standard accounting practice and remain auditable apart from invoice history.

Flexible creation

Credits can enter the system in several ways without changing how you manage them afterward:

• Automatic — The platform issues a credit memo when billing events (such as downgrades, refunds, or negative metered usage) produce a credit balance.
• From an invoice — Authorized users start creation from an unpaid invoice and select the lines or amounts to credit, with billing items grouped at the product level when the grouped creation experience is enabled.
• Ad hoc — Marketplace Managers can issue standalone credits (for example, goodwill adjustments) by choosing the company, user, and line items, with optional subscription lookup by product name or UUID.

❗ Important: You cannot create credit memos for your own company.

Flexible application

After a credit memo is created, its balance reduces outstanding or future unpaid invoices for the same customer that owns the credit memo. One credit memo can apply across multiple invoices; multiple credit memos can apply to a single invoice.

Application behavior:

• The platform can apply available credit automatically when new invoices are generated, or users can apply credit manually from the credit memo or invoice detail pages (based on marketplace settings and creation-time options).
• Credits are applied after discounts are calculated.
• With company-wide billing enabled, eligible unpaid invoices within the same company can receive applied credit.
• A credit memo cannot be applied to another company's invoices.

Full lifecycle management

Credit memos progress through the following statuses:

Status	Meaning
Unapplied	Created but not yet used.
Partially applied	Some of the credit has been applied to invoice(s).
Fully applied	Entire credit amount has been applied.
Paid out	The full amount is returned to the customer's payment method. Funds are returned by processing a refund from the Payments page. See Refund payments.

Additional lifecycle actions:

• Void — Marketplace Managers and Developers can void a credit memo from the UI when it is still Unapplied (with confirmation). Applied, partially applied, or paid-out credit memos cannot be voided from the UI.
• Close — Remaining balance can be closed to write off unused credit according to your marketplace rules.

📝 Note: Voiding removes an unapplied credit memo from active records; it does not trigger a separate reconciliation process.

Visibility and reporting

Dedicated Credit Memos list and detail pages support search, filters, and review of line items, remaining balance, and application history. Applied amounts and links appear on related invoices as well, so finance and support teams can trace how credit was issued and consumed. Credit memos are included in Invoice Details reporting at the time of creation.

PDFs and customer notifications

Credit memo PDFs are generated through Document Builder using a Credit Memo document type that you configure independently from invoice templates. Customers can download PDFs from the credit memo detail page, and you can enable a Credit Memo PDF Created notification template to deliver the document by email.

Credit limit and integrations

Available (unapplied) credit memos reduce a company's credit limit exposure the same way they reduce outstanding balance, so purchase and checkout validations reflect issued credit. Credit memos run on the V2 billing pipeline with decoupled processing for high-volume environments. Existing V1 invoice webhooks, APIs, and out-of-the-box reports continue to work with credit memo-enabled marketplaces.

For step-by-step workflows, see:

• Create credit memos
• Manage credit memos