diff --git a/app/Repositories/BaseRepository.php b/app/Repositories/BaseRepository.php
index 18e3a00c1d..4f7c68b4f0 100644
--- a/app/Repositories/BaseRepository.php
+++ b/app/Repositories/BaseRepository.php
@@ -203,10 +203,8 @@ class BaseRepository
         $resource = explode('\\', $class->name)[2]; /** This will extract 'Invoice' from App\Models\Invoice */
         $lcfirst_resource_id = lcfirst($resource).'_id';
 
-        if ($class->name == Invoice::class || $class->name == Quote::class) {
-            $state['starting_amount'] = $model->amount;
-        }
-
+        $state['starting_amount'] = $model->amount;
+        
         if (! $model->id) {
             $company_defaults = $client->setCompanyDefaults($data, lcfirst($resource));
             $model->uses_inclusive_taxes = $client->getSetting('inclusive_taxes');
@@ -320,7 +318,10 @@ class BaseRepository
         }
 
         if ($class->name == Credit::class) {
+
             $model = $model->calc()->getCredit();
+            
+            $model->ledger()->updateCreditBalance(($state['finished_amount'] - $state['starting_amount']));
 
             if (! $model->design_id) {
                 $model->design_id = $this->decodePrimaryKey($client->getSetting('credit_design_id'));
diff --git a/app/Services/Credit/MarkSent.php b/app/Services/Credit/MarkSent.php
index 2e86b79c8b..fdd6e1d891 100644
--- a/app/Services/Credit/MarkSent.php
+++ b/app/Services/Credit/MarkSent.php
@@ -45,6 +45,7 @@ class MarkSent
              ->applyNumber()
              ->save();
 
+
         return $this->credit;
     }
 }
diff --git a/app/Services/Invoice/AutoBillInvoice.php b/app/Services/Invoice/AutoBillInvoice.php
index 10230eeb5b..4d3b0781ae 100644
--- a/app/Services/Invoice/AutoBillInvoice.php
+++ b/app/Services/Invoice/AutoBillInvoice.php
@@ -21,6 +21,7 @@ use App\Models\PaymentHash;
 use App\Services\AbstractService;
 use App\Services\Client\ClientService;
 use App\Services\Payment\PaymentService;
+use App\Utils\Ninja;
 use App\Utils\Traits\GeneratesCounter;
 use Illuminate\Support\Str;
 
@@ -30,7 +31,7 @@ class AutoBillInvoice extends AbstractService
 
     private $client;
 
-    private $payment;
+    private $used_credit = [];
 
     public function __construct(Invoice $invoice)
     {
@@ -52,15 +53,15 @@ class AutoBillInvoice extends AbstractService
         if ((int)$this->invoice->balance == 0) 
             return $this->invoice->service()->markPaid()->save();
 
-        $this->applyCreditPayment();
+        $this->applyCreditPayment(); //if the credits cover the payments, we stop here, build the payment with credits and exit early
 
         /* Determine $amount */
         if ($this->invoice->partial > 0) 
             $amount = $this->invoice->partial;
-        elseif($this->invoice->balance >0)
+        elseif($this->invoice->balance > 0)
             $amount = $this->invoice->balance;
         else
-            return $this->invoice;
+            return $this->finalizePaymentUsingCredits();
 
         $gateway_token = $this->getGateway($amount);
 
@@ -86,6 +87,56 @@ class AutoBillInvoice extends AbstractService
         return $this->invoice;
     }
 
+    /**
+     * If the credits on file cover the invoice amount
+     * the we create a matching payment using credits only
+     *     
+     * @return Invoice $invoice
+     */
+    private function finalizePaymentUsingCredits()
+    {
+        info("finalizing");
+        info(print_r($this->used_credit,1));
+        $amount = array_sum(array_column($this->used_credit, 'amount'));
+     info("amount {$amount}");
+
+        $payment = PaymentFactory::create($this->invoice->company_id, $this->invoice->user_id);
+        $payment->amount = $amount;
+        $payment->client_id = $this->invoice->client_id;
+        $payment->currency_id = $this->invoice->client->getSetting('currency_id');
+        $payment->date = now();
+        $payment->status_id = Payment::STATUS_COMPLETED;
+        $payment->service()->applyNumber()->save();
+
+        $payment->invoices()->attach($this->invoice->id, ['amount' => $amount]);
+
+        $this->invoice->service()->setStatus(Invoice::STATUS_PAID)->save();
+
+        foreach($this->used_credit as $credit)
+        {
+            $payment->credits()->attach($credit['credit_id'], ['amount' => $credit['amount']]);
+        }
+
+            $payment->ledger()
+                    ->updatePaymentBalance($amount * -1)
+                    ->save();
+
+            $this->invoice->client->service()
+                                  ->updateBalance($amount * -1)
+                                  ->updatePaidToDate($amount)
+                                  ->adjustCreditBalance($amount * -1)
+                                  ->save();
+
+            $this->invoice->ledger()
+                          ->updateInvoiceBalance($amount * -1, 'Invoice payment using Credit')
+                          ->updateCreditBalance($amount * -1, 'Credits used to pay down Invoice ' . $this->invoice->number)
+                          ->save();
+
+        event(new PaymentWasCreated($payment, $payment->company, Ninja::eventVars()));
+
+        return $this->invoice->service()->setStatus(Invoice::STATUS_PAID)->save();
+    }
+
     /**
      * Applies credits to a payment prior to push
      * to the payment gateway
@@ -112,48 +163,50 @@ class AutoBillInvoice extends AbstractService
             $is_partial_amount = true;
         }
 
-        $this->payment = PaymentFactory::create($this->client->company_id, $this->client->user_id);
-        $this->payment->save();
+        $this->used_credit = [];
 
-        $available_credits->each(function($credit) use($is_partial_amount){
+        foreach($available_credits as $key => $credit) {
 
-            //todo need to iterate until the partial or balance is completely consumed 
-            //by the credit, any remaining balance is then dealt with by
-            //the gateway
-            //each time a credit is applied SAVE the invoice
+            if($is_partial_amount) {
+
+                //more credit than needed
+                if($credit->balance >= $this->invoice->partial) {
+                    $this->used_credit[$key]['credit_id'] = $credit->id;
+                    $this->used_credit[$key]['amount'] = $this->invoice->partial;
+                    $this->invoice->balance -= $this->invoice->partial;
+                    $this->invoice->partial = 0;
+                    break;
+                }
+                else {
+                    $this->used_credit[$key]['credit_id'] = $credit->id;
+                    $this->used_credit[$key]['amount'] = $credit->balance;
+                    $this->invoice->partial -= $credit->balance;
+                    $this->invoice->balance -= $credit->balance;
+                }
+            }
+            else {
+
+                //more credit than needed
+                if($credit->balance >= $this->invoice->balance) {
+                    $this->used_credit[$key]['credit_id'] = $credit->id;
+                    $this->used_credit[$key]['amount'] = $this->invoice->balance;
+                    $this->invoice->balance = 0;
+                    break;
+                }
+                else {
+                    $this->used_credit[$key]['credit_id'] = $credit->id;
+                    $this->used_credit[$key]['amount'] = $credit->balance;
+                    $this->invoice->balance -= $credit->balance;
+                }
+
+            }
+        }
 
-            // if($credit->balance >= $amount){
-            //     //current credit covers the total amount
 
-            // }
-                //return false to exit each loop
-        });
 
         return $this;
     }
 
-    private function buildPayment($credit, $is_partial_amount)
-    {
-        if($is_partial_amount) {
-
-            if($this->invoice->partial >= $credit->balance) {
-
-                $amount = $this->invoice->partial - $credit->balance;
-                $this->invoice->partial -= $amount;
-
-                $this->payment->credits()->attach([
-                    $credit->id => ['amount' => $amount]
-                ]);
-
-                $this->payment->invoice()->attach([
-                    $this->invoice->id => ['amount' => $amount]
-                ]);
-
-                $this->applyPaymentToCredit($credit, $amount);
-            }
-        }
-
-    }
 
 
     private function applyPaymentToCredit($credit, $amount)
@@ -173,7 +226,6 @@ class AutoBillInvoice extends AbstractService
 
         $credit = $credit->calc()->getCredit();
 
-
     }
 
     /**
diff --git a/app/Services/Ledger/LedgerService.php b/app/Services/Ledger/LedgerService.php
index 4f34a6ba77..ace36ad43d 100644
--- a/app/Services/Ledger/LedgerService.php
+++ b/app/Services/Ledger/LedgerService.php
@@ -66,6 +66,8 @@ class LedgerService
         $company_ledger->save();
 
         $this->entity->company_ledger()->save($company_ledger);
+
+        return $this;
     }
 
     public function updateCreditBalance($adjustment, $notes = '')
diff --git a/tests/MockAccountData.php b/tests/MockAccountData.php
index 4d7209d7c3..31c88f16fd 100644
--- a/tests/MockAccountData.php
+++ b/tests/MockAccountData.php
@@ -227,12 +227,6 @@ trait MockAccountData
         $this->invoice = InvoiceFactory::create($this->company->id, $this->user->id); //stub the company and user_id
         $this->invoice->client_id = $this->client->id;
 
-        // $this->invoice = Invoice::factory()->create([
-        //         'user_id' => $this->user->id,
-        //         'client_id' => $this->client->id,
-        //         'company_id' => $this->company->id,
-        //     ]);
-
         $this->invoice->line_items = $this->buildLineItems();
         $this->invoice->uses_inclusive_taxes = false;
 
@@ -316,7 +310,6 @@ trait MockAccountData
         $this->credit->uses_inclusive_taxes = false;
 
         $this->credit->save();
-
         $this->credit->service()->createInvitations()->markSent();
 
         $this->credit_calc = new InvoiceSum($this->credit);
@@ -325,6 +318,9 @@ trait MockAccountData
         $this->credit = $this->credit_calc->getCredit();
         $this->credit->service()->markSent();
 
+        $this->client->service()->adjustCreditBalance($this->credit->balance)->save();
+        $this->credit->ledger()->updateCreditBalance($this->credit->balance)->save();
+        
         $contacts = $this->invoice->client->contacts;
 
         $contacts->each(function ($contact) {
diff --git a/tests/Unit/AutoBillInvoiceTest.php b/tests/Unit/AutoBillInvoiceTest.php
new file mode 100644
index 0000000000..e31ddd2f15
--- /dev/null
+++ b/tests/Unit/AutoBillInvoiceTest.php
@@ -0,0 +1,57 @@
+<?php
+/**
+ * Invoice Ninja (https://invoiceninja.com).
+ *
+ * @link https://github.com/invoiceninja/invoiceninja source repository
+ *
+ * @copyright Copyright (c) 2020. Invoice Ninja LLC (https://invoiceninja.com)
+ *
+ * @license https://opensource.org/licenses/AAL
+ */
+namespace Tests\Unit;
+
+use App\Models\Invoice;
+use Illuminate\Foundation\Testing\DatabaseTransactions;
+use Tests\MockAccountData;
+use Tests\TestCase;
+
+/**
+ * @test
+ * @covers App\Services\Invoice\AutoBillInvoice
+ */
+class AutoBillInvoiceTest extends TestCase
+{
+    use MockAccountData;
+    use DatabaseTransactions;
+
+    public function setUp() :void
+    {
+        parent::setUp();
+
+        $this->makeTestData();
+    }
+
+    public function testAutoBillFunctionality()
+    {
+
+        // info("client balance = {$this->client->balance}");
+        // info("invoice balance = {$this->invoice->balance}");
+
+
+        $this->assertEquals($this->client->balance, 10);
+        $this->assertEquals($this->client->paid_to_date, 0);
+        $this->assertEquals($this->client->credit_balance, 10);
+
+        $this->invoice->service()->markSent()->autoBill()->save();
+
+        // info(print_r($this->invoice->payments()->first()->toArray(),1));
+        $this->assertNotNull($this->invoice->payments());
+        $this->assertEquals(10, $this->invoice->payments()->sum('payments.amount'));
+
+        //info(print_r($this->invoice->payments()->get(),1));
+        $this->assertEquals($this->client->balance, 0);
+        $this->assertEquals($this->client->paid_to_date, 10);
+        $this->assertEquals($this->client->credit_balance, 0);
+    }
+
+}