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Introduction - Vendor Credits

A vendor credit is a credit note received from a supplier.

Recording a credit from a supplier and setting it against what you owe.

It reduces what you owe them, and it is the purchase-side mirror of the credit notes you issue to customers. Overcharges, returned goods and agreed discounts all arrive as one.

The Vendor Credits screen listing eighteen credits with columns for Credit Note Date, Credit Note Number, Reference Number, Vendor, Status, Total Amount and Balance. The first row, DN-00018 against Luton Site Safety Supplies Ltd, is Draft for 115.50 with the full amount still sitting in Balance.
Balance is the part of the credit still unused. It falls as the credit is applied to bills.

What it is and is not

A vendor credit reduces the cash you send rather than arriving as cash itself. That is the useful thing to know about it, because it means an unused credit is money sitting idle until somebody applies it.

  1. Credit receivedVendor agrees a reduction
  2. RecordedAvailable balance on the vendor
  3. AppliedNext payment reduced
  4. Or refundedIf money comes back

Returned goods

If you sent physical goods back, the stock has to come out as well as the value. Record the stock movement in Inventory, then record the vendor credit for the value. The two are separate records because a supplier can credit you without wanting anything returned.

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