When giving credit can help solve an issue with your client
We have all been there; the service has been rendered and the invoice has been sent out. The invoice due date has come and gone and you still have not been paid. Perhaps you have already called and spoken to your customer in the past and gotten a promise that payment was coming out soon.
Soon has not come and neither has the payment. So you contact your customer again and this time, to your surprise, the customer complains about the quality of the service or the delivery date.
You check your records and see that this has never been brought up before, everything was just fine. As far as you are concerned there was nothing wrong with either the product delivered or the service. It looks like a belated excuse not to pay your bill.
At this point some business people will issue a credit or reduction of their invoice just to get it paid and get thiswrapped up.
Clearly this will eat into your profit margin but it might be worth your while so you can get the matter resolved in an amicable fashion without wasting too much time and money.
Issuing a credit: doing it right
The idea of issuing a credit on an already issued invoice is to get the customer to not only pay, but pay quickly and not give you any more headaches. You want the credit to have the desired effect and also protect you from a client who will take your credit and still not pay you!
What your credit should look like
Make sure you show the original amount due, the date when it was due, and the amount of your credit ( say 10% or whatever you agreed on) and then the new total balance.
Last but most important stipulate a deadline by which the balance must be paid, failing which the credit is withdrawn and the amount due will revert to the original balance. This will motivate your customer and also protect you down the road from being stuck with your lower amount should you have to take 3rd party action to get paid.
You should require your customer to pay you within 7 days of getting the credit, make it a win -win settlement.