Vendor Credits

Record credit notes from vendors for returns, billing errors, or negotiated allowances. Apply credits against outstanding bills to reduce what you owe.

Creating a Credit Note

A vendor credit note records money that a vendor owes you. This typically happens when:

• You returned goods to the vendor
• The vendor overcharged you on a bill
• You received a billing adjustment or allowance
• Goods arrived damaged and the vendor issued a credit
• A service was not delivered as agreed

To create a vendor credit:

1. Navigate to Vendors from the sidebar
2. Select the vendor who issued the credit
3. Click New Credit Note (or navigate to Vendor Credits and click Create Credit)
4. Enter the Credit Date -- typically the date the vendor issued the credit
5. Enter a Reference Number if the vendor provided one (e.g., their credit memo number)
6. Add line items describing what the credit is for:
   • Description: What was returned or adjusted
   • Account: The expense or asset account to credit (this reverses the original charge)
   • Amount: The credit amount for this line
7. Add any relevant notes for your records
8. Click Save Credit

Journal Entry Created

The moment you apply a vendor credit to a bill, BizBooks Pro records the matching journal entry for the amount you applied:

This lowers what you owe that vendor in accounts payable and reverses the original expense or asset charge by the amount applied. You choose the account it credits when you create the credit — typically the same expense the original bill hit.

Applying Credits to Bills

After creating a vendor credit, you can apply it against outstanding bills from the same vendor to reduce the amount you need to pay.

1. Open the vendor credit you want to apply
2. Click Apply to Bill
3. Select the outstanding bill (or bills) from the list
4. Enter the amount to apply against each bill
   • You can apply the full credit to one bill
   • Or split the credit across multiple bills
   • Or apply a partial amount and keep the rest as an open credit
5. Click Apply

When a credit is applied to a bill:

• The bill's balance due is reduced by the applied amount
• If the credit fully covers the bill, the bill status changes to Paid
• If the credit partially covers the bill, the remaining balance stays outstanding
• The credit's available balance decreases by the applied amount

Example

You have a $500 credit from a vendor and two outstanding bills:

Recording a Refund

Sometimes a vendor does not leave you holding a credit — they send the money back. A credit that has been refunded must not stay open waiting to offset a future bill, or you will be counting the same money twice: once in your bank and once as available credit.

To record it:

1. Open the vendor credit
2. Click Record Refund
3. Enter the amount the vendor returned and the date it arrived
4. Choose the account it was deposited into — the bank account the money actually landed in
5. Choose how it was refunded — check, cash, credit card refund, EFT, ACH, wire, PayPal or other
6. Optionally add a reference number (the vendor's cheque number, for instance)
7. Click Record Refund

The payment method and the deposit account are separate questions, and both matter. A credit card refund goes back onto the card it was paid with, so pick the credit card account there rather than a bank account — that reduces the card liability instead of adding cash you never received.

Journal Entry Created

This is the same offset account that an applied credit reduces. A refund and an application relieve the same thing — they differ only in what takes the other side: cash here, accounts payable when the credit is applied to a bill.

Partial Refunds

A vendor may refund part of a credit and leave the rest on account. Record the refunded portion and the credit stays Open with the remainder still available for future bills. Once the full amount has been refunded, the credit closes with a status of Refunded.

A refund can only draw on what is still open. Anything already applied to a bill has been spent — the vendor cannot hand back money that was used to settle an invoice you no longer owe — so BizBooks Pro will not let a refund exceed the credit's remaining balance.

Sales Tax on a Vendor Credit

If you reclaimed sales tax on the original purchase, returning the goods has to reverse that claim — otherwise you are still recovering tax on items you no longer own.

Pick a Sales Tax Code on the credit, normally the one that was on the original bill. The amount you enter is before tax; BizBooks Pro adds the tax and shows the running total.

When the credit is later applied to a bill or refunded, the entry reverses the tax alongside it:

Only recoverable components reverse against your input tax credit. Non-recoverable taxes such as PST were charged to expense when you bought the goods rather than claimed back, so they unwind against the offset account instead.

Part-relieving a credit unwinds a matching share of the tax. Refund half a taxable credit and half its input tax credit reverses, leaving the rest to unwind when the remainder is used.

Returned Goods on a Credit

A vendor credit can name the items going back rather than just a total. Tick Goods are going back to the vendor on the credit form and add a line per product; the stock comes off your shelf at the point the credit is created, because that is when the goods physically leave.

When a credit has lines, they set its value — you do not enter a separate amount that could disagree with them. Deleting the credit puts the stock back.

Viewing Open Credits

To see all vendor credits that have not been fully applied:

1. Navigate to Vendor Credits from the sidebar (or from within the Vendors section)
2. The list shows all credit notes with their current status
3. Filter by Status to show only open credits
4. Filter by Vendor to see credits from a specific vendor

For each credit, the list displays:

• Credit number and date
• Vendor name
• Original amount: The total credit value when created
• Applied amount: How much has been applied to bills so far
• Available balance: The remaining unapplied amount
• Status: Open or Applied (see below)

Credit Status

Vendor credits have two possible statuses:

A credit starts as Open when created and transitions to Applied once the full amount has been used against bills.

Deleting Credits

You can delete a vendor credit only if it has not been applied to any bills.

1. Open the vendor credit from the list
2. Click Delete Credit
3. Confirm the deletion

If the credit was already applied to bills, unapply it first — that reverses the journal entries and restores the original accounts payable and expense balances. An unapplied credit has no journal entry yet, so deleting it simply removes the record.

Credits That Have Been Applied

If a credit has already been applied to one or more bills, it cannot be deleted directly. To remove it, you must first:

1. Unapply the credit from all bills it was applied to
2. Once the credit is fully unapplied (status returns to Open), you can delete it

This safeguard prevents accidental deletion of credits that have already affected bill balances and payment records.