What happens when you issue a credit note after a lost payment dispute

When a payment dispute is lost, the customer wins a chargeback, the original invoice is marked accordingly and the funds are reversed by the payment provider. If you then issue a credit note against that invoice, Lago won't offer a refund option, since there's nothing to refund: payment was never collected or retained. The only available option is to credit the amount to the customer's account.

Where the credit goes

Issuing the credit note doesn't make the amount disappear. The balance is added to the customer's available credits and automatically applies to their next invoice unless you take action to prevent it, which is typically not the desired outcome after a chargeback, since it effectively gives the customer a future discount to compensate for a payment they already reversed.

What to do

After issuing the credit note, go to the customer's Credit Notes tab and void it. Voiding zeroes the remaining balance and sets the credit note to a permanently non-usable state, so the credits won't be applied to future invoices. This is the correct way to close out a disputed invoice: the credit note documents the accounting adjustment, and voiding it keeps the balance from quietly flowing into future billing.

This article reflects guidance drawn from customer case resolutions. It is not officially supported documentation and may not apply to all situations.