# Credit Note (Applied to Balance) {% embed url="" %} The Credit Note Deposit is a strategic payment type designed to secure upfront revenue while simplifying your ongoing billing cycle. Unlike traditional bonds, this deposit is intended to be used as payment for the initial period of a subscription or rental. **How it Works** * Upfront Collection: Funds are charged immediately at your chosen trigger point (Booking Confirmation or Activation). * Automatic Conversion: Loopit automatically converts the deposit into a standing Credit Note on the customer’s account. * Smart Drawdown: The system prioritizes this credit balance for upcoming invoices. Loopit will automatically apply the credit to the first few billing cycles until the balance is exhausted, before reverting to the customer's stored payment method. {% hint style="info" %} Automatically apply credit notes must be enabled in order for Credit Note deposit types to be automatically applied to a balance. {% endhint %} **Key Benefits** * Boost Immediate Liquidity: Get cash in the door on day one to cover the first weeks or months of a booking, improving your business's cash flow. * Reduce Payment Risk: Ensure a customer has met their initial financial obligations before they take delivery of the vehicle, minimizing the risk of "first-month" failed payments. * Accountant-Friendly Automation: Because these are handled as Credit Notes, your tax invoices and revenue recognition stay perfectly synced without manual adjustments. * Strategic Flexibility: You can layer this with other deposit types—for example, taking a Security Deposit Hold for asset protection and a Credit Note Deposit for upfront rent in the same transaction. > Ideal Use Case: Implementing a "First Month Upfront" policy where you want to secure the first 4 weeks of payment as soon as the customer signs up. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.loopit.co/bookings/deposits/credit-note-applied-to-balance.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.