> For the complete documentation index, see [llms.txt](https://docs.loopit.co/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.loopit.co/billing/credit-notes/auto-apply-credit-notes.md).

# Auto-apply credit notes

## Overview

The **Auto-Apply Credit Notes** setting determines whether available credit notes under a billing owner’s account should be automatically applied to invoices when auto-pay is enabled on a booking. When enabled, this feature helps streamline billing by using any available credits before charging the customer's default payment method.

### Setup the auto-apply rule

The auto-apply rule can be configured at the booking level, it defaults to enabled.

<figure><img src="/files/shia0Si55rW7sfKGFw05" alt=""><figcaption></figcaption></figure>

#### When Enabled

* Credit notes belonging to the **billing owner** are automatically applied **to the first invoice** or **to recurring invoices** of the booking at the time of auto-payment.
* If the credit notes do not cover the full invoice amount, the **remaining balance** will be charged to the default payment method.
* Ensures minimal manual intervention in applying credits.

#### When Disabled

* No credit notes are applied automatically.
* The **full invoice amount** will be charged to the default payment method when auto-pay is triggered.
* Credit notes can still be applied manually if needed.