Credits

Credits are a financial tool used to correct billing errors, adjust for service changes after an invoice has been generated, manage non-payment (bad debt), and close resident accounts. Credits are reactive adjustments and are the best-practice method for correcting charges from a previous billing period, as they create a clean audit trail for accounting, especially for closed GL periods. 

About Credits

• Credits are the reactive adjustments and the primary method for correcting a charge that was billed incorrectly on a previous invoice, such as for an unplanned move-out or a service change. If your team has been given notice of service changes move-outs, the crediting process can be prevented by adding rate changes ahead of the billing period in which they will occur. For information, read this Recurring Charges and Rate Changes guide.
• Applying a credit (especially a prorated one) to an existing invoice creates a clear and separate transaction. This is the preferred accounting practice over editing a historical charge, which can disrupt financial reporting.
• When a credit is applied to a paid invoice, it often results in an overpayment. This overpayment balance can then be applied to a future invoice or processed as a Refund. Refer to these Resident Refunds and ALIS Pay: Refunds and Voids guides for more information.
• You can also add a credit directly to the Credits section of a resident's profile (instead of a specific invoice) to have it apply automatically to the next invoice that generates.
• Credits are used to write off uncollectible balances (bad debt) by applying a specific "Bad Debt" credit to zero out an outstanding invoice.  
• For more information on Credits as they pertain to your monthly billing process, refer to this ALIS Monthly Invoicing guide.

Apply a Credit to an existing invoice

This is the most common workflow and is used to adjust an invoice that has already been generated. It is the correct process for correcting billing errors, accounting for an unplanned move-out, or handling a change of service (such as moving to a different room or updating a care plan fee).

Adding a prorated credit to an invoice helps ensure the exported GL transactions are chronologically accurate. This is much better practice than editing the dates of a charge that has already been invoiced.

1. Navigate to the Edit Invoice page for the invoice you need to adjust. This takes you to the Edit Invoice page.
2. In the Transactions section, click the CR link in the row of the item you need to credit.
   • Note: If the CR option is not available (which can happen if the GL period is closed), click the Apply Credit button at the top right of the Transactions area instead. You will still be able to apply the credit but will require more manual steps.
3. Complete all details in the pop-up that appears. Ensure the Amount Calculation is set to Prorated and the Credit Service Period reflects the exact dates the payer should be credited for. 
   • It is good practice to add a clear Description (e.g., "Credit for 10/25 move-out") for future reference. 
   • If the invoice has a payment, a pop-up will ask how to handle the new overpayment. The most common practice is to unapply only the overpayment amount, but confirm this policy with your accounting team.
4. Click Save to apply the credit, which can be viewed immediately on the existing invoice.

Manage overpayments resulting from Credits

Applying a credit to an invoice, particularly one that has already been paid, will create an overpayment balance on the resident's account. This overpayment can then be applied to future invoiced charges or processed as a Refund.

This workflow is a common middle step when managing the final bill for an unplanned move-out. 

Per best accounting practices, you must refund the overpayment balance that is created by the credit. It is not a good accounting practice to create a credit on an account and then refund that credit directly.

For detailed instructions on these related workflows, please refer to the following guides:

• This Resident Refunds guide to learn how to process a refund for an overpayment.
• This Billing for Resident Move-Outs guide covers the full process of reconciling a moved-out resident's account.

Add a Credit for a future invoice 

This method is used if your policy is to apply credits to future charges rather than to a past invoice. With this method, you will add the credit directly to the Credits section of the resident profile. 

1. Verify your community has the "Automatically Apply Excess Credits to Invoices" setting turned on in Billing Settings. For assistance, contact your Account Manager or our ALIS Customer Success Team. 
2. Navigate to the Billing section of the resident's profile and go to the Credits section.
3. Click the +Add Credit button.
4. Fill in the details of the Create Credit pane. 
   • You must select the billing item from the Credit For dropdown menu. 
   • Set the Amount Calculation to Prorated, add the Credit Service Period, and Item Price. 
   • Be sure to add a clear Description, as this will be applied separately from the original charge/invoice. 
   • An Internal Note may be useful to add if you want to include information that should not display on the invoice to which it will apply in the future.
5. Click Save. This credit will be unapplied for now and will automatically be used on the next invoice that generates for the resident. 
   • This credit can be applied to any invoice at any time. However, if you take no manual action after the credit is created (and the above-mentioned setting is turned on), it will apply to the next invoice that generates. The overall balance of the future invoice will be lower as a result of the credit.

Use a Credit for bad debt/write-offs

In the event that you will not be able to collect on an invoice, a credit is the best practice to write off the outstanding balance and lock the resident's account.

On the outstanding invoice, apply a credit using a specific "Bad Debt" or "Write Off" billing item. This zeroes out the invoice balance and ensures the concession is exported to the correct GL account. For assistance setting up billing items, please refer to this Billing Settings guide.

Audit Credits 

To review all credits issued within a specific date range, navigate to the Credits Report from the main Reports page. This allows you to audit credit details and ensure accuracy.

The report Issued On Date defaults to the current month. Change this or other filters as needed and click Refresh to update data shown. 

Related Articles:

• Recurring Charges and Rate Changes
• Billing for Resident Move-Outs
• Resident Refunds 
• Discounts vs. Credits

For more assistance with Credits,

Contact our ALIS Customer Success Team:

888.404.ALIS (2547) or support@go-alis.com