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Refunds

When a supplier sends money back rather than crediting your next invoice, record the refund against the credit.

Otherwise the credit sits unused forever and your cash and your payables both disagree with reality.

An open vendor credit, DN-00004, showing the vendor it came from, the credited lines, its status and the balance still available to use.
A refund is recorded against the credit itself, which is what brings its balance down to nothing.

Record a refund

  1. Check what is unapplied

    Only the remaining part of a credit can be refunded. Applied value has already reduced a bill.

  2. Raise the refund against the credit

    Choose the account the money arrived in.

  3. Set the date it arrived

    Your bank reconciliation matches on this date.

  4. Save

    Cash increases and the credit clears by the refunded amount.

Which balance to refund from

They are sending money becauseRefund againstWhy
They overcharged youThe vendor creditValue was reversed on a bill.
You overpaid themThe prepaymentThe money was never matched to a bill.
You returned goodsThe vendor creditRaised for the returned value.
A deposit is no longer neededThe prepaymentIt was never a cost.

Getting this right matters because each route clears a different balance. A refund taken from the wrong place leaves either a credit or a prepayment sitting on the vendor that nobody will ever use.

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