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Credit Notes and Write-Offs — What’s the Difference and How to Use Them

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Law App has two separate tools for reducing or removing a client’s outstanding balance. Which one you use depends on whether the client is receiving an adjustment, or you’re writing off an unrecoverable debt.

Credit note

Client receives a reduction

Use when reducing or reversing a debtor invoice. The client sees it. Any balance in their favour must go to trust — it cannot sit on the debtors ledger.

Write-off

Internal bad debt adjustment

Use when a debt is irrecoverable or you’ve decided not to pursue it. Removes the balance from your debtors ledger. The client receives nothing.

How to issue a credit note

There are two methods — use whichever suits your workflow.

Method 1 — Negative time entries

  1. Enter time entries against the file using negative amounts
  2. Bill those entries as normal
  3. When selecting the invoice layout, choose Credit Note

Method 2 — Add directly to a debtor invoice

  1. Open or create a debtor invoice
  2. Press + to add a line
  3. Type TS in the type field and select GL Professional Fees
  4. Enter the fee earner and enter the amount as a negative number
  5. Press Save
  6. Press the Print button and select Credit Note as the layout
  7. From here you can print to PDF, save to the file, or use the Compose button to automatically draft an email with the credit note attached and send it directly to the client

In a legal practice, a client credit cannot sit on the debtors ledger. Any balance in the client’s favour must go to trust.

If you realise at the time of receipt

  1. First line — allocate the amount that pays the outstanding invoice in full
  2. Second line — receipt the balance to trust against the file

This keeps everything in one transaction and avoids any need for a subsequent transfer.

If the money is already in your general account — draw the funds back out and receipt them into trust. There are two methods for doing this. See: Trust money received in your general account

How to process a write-off

  1. Go to Accounts → Write-Offs
  2. Click Add Write-Off
  3. Fill in the header — Contact, Reference, Description (e.g. “Unpaid for over 1 year”), Owed By
  4. Click Save — the screen expands to show Write-Off Lines
  5. Click Add — select Type, Item, GL Account and enter the gross amount
  6. Click Save again — the Write-Off button will appear
Write-off screen showing header fields and write-off lines
Don’t skip the save. You must save the write-off line before the Write-Off button appears. Saving is what allows the system to check the file and find outstanding invoices available for allocation.
  1. Click Write-Off — a dialog opens showing outstanding invoices for that contact
  2. Select the invoice(s) to allocate against and Save to finalise
Outstanding invoices allocation dialog
Tip: If no invoices appear in the Outstanding Invoices dialog, check that the gross and tax amounts on the write-off line exactly match the invoice. A mismatch will prevent allocation.

Write-offs affect the GL and debtors ledger only — they do not affect trust accounting. If you need to reverse a trust transaction, contact support.

Updated on 26 April 2026
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Kelly Mills

CEO

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