Credits are a great way to track payments received from Clients that have not been applied yet. You can apply this Credit towards existing and new invoices for payment in a few quick clicks.

To create a credit note in CloudBooks, go to Invoice section and click Credit, and enter the amount and create a credit note for that client. 

After that, go to the Invoice section and click on the invoice number, click Action, and click Enter payment, and on the Payment mode click Credit and update payment.