> ## Documentation Index
> Fetch the complete documentation index at: https://docs.arcuserp.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Apply Account Credit to an Order

> Use a customer's account credit or prepaid balance to offset charges on a new order or invoice.

<Note>
  Account credit comes from customer overpayments, refunded orders, or prepaid deposits. Learn how to apply it to reduce the amount a customer owes.
</Note>

## When to use this workflow

* A customer has a refund credit from a previous return and wants to apply it to a new order
* A customer made a prepayment and you need to deduct it from their invoice
* You need to apply a promotional credit to reduce an order total
* A customer overpaid an invoice and you want to credit the overage to their account

## Prerequisites

* The customer account must have an available credit balance
* You must have permission to apply credits (typically Sales or Accounting roles)

## How to apply credit

### Step 1: Locate the customer's available credit

1. Open the customer's account.
2. Go to the **Payments** tab.
3. Look for the **Account Credit Balance** row. This shows the amount available to apply.

***

### Step 2: Create or open the order/invoice to apply credit to

**Option A: Apply credit when creating a new order**

1. Click **Create Order** and build the order as normal.
2. Review the **Order Total** at the bottom.
3. Before completing the order, you'll see a **Use Account Credit** checkbox or field.
4. Enter the amount of credit you want to apply (or leave blank to apply the full available balance).
5. The order total is reduced by the credit amount.
6. Click **Confirm and Create Order**.

**Expected result:** The order is created with the credit applied. The customer's credit balance is reduced by the applied amount.

***

**Option B: Apply credit to an existing invoice**

1. Open the invoice.
2. Click **Apply Credit** in the invoice actions menu.
3. Enter the amount to apply (or select "Apply Full Balance" to use all available credit).
4. Click **Confirm**.

**Expected result:** The invoice balance is reduced. A credit memo is created in the GL to record the application.

***

### Step 3: Confirm the credit application

After applying credit, verify:

* **Customer's new credit balance:** Should be reduced by the applied amount.
* **Invoice/Order total:** Should reflect the credit deduction.
* **GL entry:** A credit memo should appear in Accounting > Credit Memos showing the credit application.

***

## Common scenarios

### Scenario 1: Customer receives a partial return and wants to use the credit immediately

1. Process the return workflow (see [Request Return](/support/returns/request-return-receive-dispose)).
2. Once the return is received and approved, a credit memo is automatically created.
3. Customer contacts you wanting to apply the credit to a new order.
4. Create a new order and use the **Apply Account Credit** feature.
5. The credit is applied and the new order total is reduced.

***

### Scenario 2: Customer prepaid \$5,000 and you need to invoice them

1. Open the customer's account.
2. Check the **Payments** tab to confirm the \$5,000 prepaid balance is showing.
3. Create an invoice for the order (say, \$3,500).
4. Click **Apply Credit** and apply the \$3,500 prepayment to the invoice.
5. The invoice balance becomes \$0 (fully paid by prepayment).
6. The customer's credit balance is now \$1,500 (remaining prepayment for future use).

***

### Scenario 3: Customer claims they were overcharged and you agree to a \$200 credit

1. Create a credit memo manually (Accounting > Credit Memos > New Credit Memo).
2. Select the customer.
3. Enter the credit amount (\$200).
4. Add a reason (e.g., "Overcharge adjustment - Order SO-001234").
5. Post the credit memo.
6. The \$200 is added to the customer's credit balance.
7. In a future interaction, apply the credit to their next order.

***

## GL impact

When you apply account credit:

* **Credit Memo GL:** A credit memo is recorded (Accounts Receivable credit, Sales or Adjustment debit, depending on the original reason for the credit).
* **Invoice GL:** The invoice balance is reduced by the applied credit amount.
* **Net effect:** The customer owes less; the GL reflects the reduction in AR.

***

## Tips

* **Always confirm the credit is legitimate** before applying it. Is it from a return? Overpayment? Promotional grant?
* **Apply credit in the same currency** as the invoice. If the customer has credit in multiple currencies, apply the matching currency first.
* **Partial application is allowed.** If the customer has $5,000 credit but only wants to apply $2,000, you can split the application.
* **Once applied, credit cannot be unapplied** through the UI. If you make a mistake, contact your manager or Accounting to reverse the credit memo.

***

## Related articles

<CardGroup cols={2}>
  <Card title="Record Payment" icon="credit-card" href="/support/orders/record-payment">
    Record customer payments and prepayments.
  </Card>

  <Card title="Customer Returns" icon="arrow-up-from-bracket" href="/support/returns/customer-returns">
    Process returns that generate credit memos.
  </Card>

  <Card title="AR Management" icon="landmark" href="/support/accounting/ar-management">
    Manage accounts receivable and aging reports.
  </Card>

  <Card title="Creating Orders" icon="cart" href="/support/orders/creating-orders">
    Build orders with credit deductions at the point of creation.
  </Card>
</CardGroup>