Vendor credits

What this does

A vendor credit is a credit memo from a supplier: a returned part, a price adjustment, a core refund. It reduces what you owe that vendor without any money moving. The credits section on Money Out → Accounts Payable lists open credits with their remaining amount, and each vendor's page shows their credits.

Before you start

accounting.manage. An open bill from the same vendor to apply the credit to; a credit can only be used against that vendor.

Where credits come from

Credits are created from documents. A credit memo scanned or forwarded into Documents and classified as a credit memo becomes an open vendor credit when it's processed, with the document attached (View source document). For a trade-account vendor the credit is applied automatically, oldest open bill first. There is no form for typing a credit in by hand; scan or forward the memo.

Steps

Apply. On an open credit choose Apply vendor credit, pick the Bill (only that vendor's open bills are offered) and the Amount (up to the smaller of the credit's remaining balance and the bill's). The bill's balance drops; the credit becomes Partially applied or Applied.

Void. Voiding a credit reverses every application (the bills reopen for those amounts) and marks the credit voided.

What happens in the books

Nothing posts when a credit is created, applied, or voided. Applying records a bill payment with method Vendor Credit against the bill, so the payable is reduced on the bill without a journal entry. The expense on the bill stands at its original amount. If your books are accrual and you need the credit reflected in the ledger, post a journal entry (Dr Accounts Payable / Cr the expense) when the credit is created.

Common problems

The credit isn't offered on a bill. Different vendor, or the bill isn't open. Merge duplicate vendor records if the credit landed on the other one.

A trade-account credit applied to the wrong bill. Void the credit and re-apply it by hand.

The vendor sent a refund check instead. That's a deposit, not a credit. Record it through the Transaction Inbox as other money, offset to the expense account.