# 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.](https://www.sorviai.com/help/vendor-credits/vendor-credit-detail.png)

*A refund is recorded against the credit itself, which is what brings its balance down to nothing.*

## Record a refund

- **Check what is unapplied**

  Only the remaining part of a credit can be refunded. Applied value has already reduced a bill.
- **Raise the refund against the credit**

  Choose the account the money arrived in.
- **Set the date it arrived**

  Your bank reconciliation matches on this date.
- **Save**

  Cash increases and the credit clears by the refunded amount.

> **Note:**
>
> **Two records, not one**
>
> The credit and the refund are both real events. Recording only the refund leaves the original overcharge unexplained; recording only the credit leaves money in your bank that nothing accounts for.

## Which balance to refund from

| They are sending money because | Refund against | Why |
| --- | --- | --- |
| They overcharged you | The vendor credit | Value was reversed on a bill. |
| You overpaid them | The prepayment | The money was never matched to a bill. |
| You returned goods | The vendor credit | Raised for the returned value. |
| A deposit is no longer needed | The prepayment | It 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.