Table of Contents

Credits and Refunds: How They Link to Invoices

Jennifer Trower Updated by Jennifer Trower

Read Time: 6 mins

Credits, refunds, and reversals all move money on an account, but they do different things and relate to invoices in different ways. The link between a credit and the invoice it paid is recorded in Sonar, but it is easy to miss, which leads to questions like “where did this credit go” or “I refunded the subscriber, so why do they still owe a balance.”

This article explains what a credit is, how a credit links to an invoice, and how refunds and reversals differ from credits, so you can read an account and explain its balance with confidence.

For step-by-step instructions on applying services, credits, refunds, and reversals on an account, see Manual Transactions.

Permissions

Before getting started with troubleshooting, your user roles will need to be adjusted to account for the permissions required to view and diagnose credit and refund linkage.

If you're a Super Admin, you already have full access and no changes are needed. To learn more, see the Roles and Permissions article.
Entity
Permission
Why it is needed
Account
View all account transactions
Opens the Transactions tab so you can see payments, discounts, invoices, and the credits linking them. Required to trace where a credit came from and where it was applied.
Account
Whether a user can reverse transactions
Lets you reverse a payment or a discount. This is what releases a credit from an invoice in a closed accounting period.
Account
Delete an account transaction
Lets you remove a transaction entered in error while the accounting period is open.
Misc
Whether a user can issue payment refunds
Lets you process a refund through the payment processor, separate from reversing the payment inside Sonar.

The Vocabulary: Credit, Payment, Discount, Refund, Reversal

These terms get used loosely, but in Sonar they mean specific things. Reading an account is much easier once they are separated.

Term
What it means in Sonar
Payment
Money received, such as cash, check, card, or bank. A payment can settle invoices or sit on the account as available credit.
Discount
A credit that is not money received, such as a goodwill adjustment, a promo, or a credit created by reversing a debit. Like a payment, it can be applied to invoices.
Credit
The link itself, the record that ties a portion of a payment or discount to a specific invoice. Applying a credit is what reduces an invoice's balance.
Reversal
An accounting action that releases the credits a payment applied and reduces the amount it had remaining. A reversal stays inside Sonar, so no money leaves the processor.
Refund
Money returned to the subscriber. For card and bank payments this is sent through the processor in real time. A refund is a separate action from a reversal.

A payment or a discount holds a value, and that value can be spent across one or more invoices. Each time some of it is applied to an invoice, Sonar records a credit that ties that amount to that invoice. The part that has not been applied stays on the source as an amount remaining, which is what the account shows as available credit.

The link runs in both directions, and you can read it from either side:

  • Open a payment or discount, and it shows the invoices its credits were applied to.
  • Open an invoice, and it shows where its credits came from.

This is why a single payment can pay down several invoices, and why one invoice can be settled by a mix of a payment and a discount. The credits are the connective tissue between them.

To see how an invoice displays its transactions and credits, and how the Apply Credits action works, see Account Management View: Overview. For invoice structure and contents, see Invoices in Sonar: Examples, Creation & Contents.

Refund Versus Reversal — the Distinction That Causes Confusion

A refund and a reversal answer two different questions. A refund answers “did money go back to the subscriber.” A reversal answers “is the payment still settling invoices inside Sonar.” They are independent, and that independence is the source of most “I refunded them but the balance is wrong” reports.

When you refund a card or bank payment, Sonar offers a checkbox to also reverse the payment. If you refund without reversing, money goes back to the subscriber but the payment's credits stay on the invoices, so the invoice still reads as paid even though the money was returned. If you reverse without refunding, the credits come off the invoices and the balance reopens, but no money is returned. In most real cases you want both, which is what the combined option is for.

Action taken
Money returned?
Invoice balance reopens?
Refund only
Yes
No, credits stay applied
Reversal only
No
Yes
Refund with reversal
Yes
Yes

Only card and bank payments can be refunded through Sonar. A cash, check, or other non-processor payment has no refund step in Sonar. You return the money outside the system and use a reversal to correct the account.

For the full walkthrough of the two-step reverse-then-refund process and the scenarios it covers, see Reversals and Refunds: Overview.

Troubleshooting Steps

Step 1: Trace Where a Credit Was Applied

Use this step when you need to find where a payment or discount went.

To troubleshoot:

  1. Open the account, go to the Billing tab, and open Transactions.
  2. Open the payment or discount in question.
  3. Review the invoices its credits paid and any amount remaining that is still available. If an amount remains, that portion is available credit and has not been applied to anything yet.

Step 2: Read an Invoice From the Other Side

Use this step when an invoice balance looks wrong.

To troubleshoot:

  1. Open the invoice and review its credits.
  2. Confirm where each credit came from. The invoice shows whether it was settled by a payment, a discount, or a mix of both.

Step 3: Apply Available Credit to an Invoice

Use this step when an account shows available credit that should be paying down a balance.

To troubleshoot:

  1. Open the target invoice and choose Apply Credits.
  2. Review the available credit total and the invoice balance Sonar displays.
  3. Enter the amount and confirm.

A frozen or fully paid invoice will not accept a credit.

Step 4: Correct a Refund That Left the Balance Wrong

Use this step when money was returned but the invoice still reads as paid.

The refund was processed without a reversal, so the credits are still applied.

To troubleshoot:

  1. Reverse the payment to release those credits and reopen the invoice balance.
  2. Provide an explanation when prompted.

Step 5: Understand What Reversing a Discount Does

Use this step when reversing a discount in a closed accounting period.

In a closed period, reversing a discount does not erase the original. It creates an offsetting debit dated today, which keeps prior financial reporting intact. In an open period, the discount is simply voided. Either way the invoice balance increases by the amount that was credited.

Accounting-period behavior for credits, discounts, and past-dated payments is described in Billing Settings.

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