This article provides steps in handling vendor credits and refunds. If you're not sure when to use Pay Bills and Write Checks, see What is the difference between Pay Bills and Write Checks/Cheques?.

Scenario 1: Link a vendor refund check to a vendor credit

If the refund is for returned inventory items, you need to create a vendor credit.

Step 1: Enter the vendor refund check in the Deposits screen

  1. Select the Plus Icon (+) at the top then Bank Deposit.
  2. In the Add other funds to this deposit section, fill in the following fields:
    • Received from: Select or enter the vendor name.
    • Account: Select the Accounts Payable account.
    • Amount: Enter the check amount.
  3. Select Save and close.

Step 2: Link the deposit to the vendor credit

  1. Select the Plus Icon (+) at the top then Check.
  2. In the Choose a payee drop-down, select the vendor name.
  3. Leave the Check #, Date, Amount and Memo fields blank.
  4. From the Add to Check section, select Add for the outstanding vendor credit and deposit.
  5. Select Save and close.

Scenario 2: Pay bills using vendor credits

Step 1: Enter the vendor credits

  1. Select the Plus Icon (+) at the top then Vendor Credit.
  2. In the Choose a vendor field, select the appropriate vendor name.
  3. Enter the Date, Amount, and Account (the account used here is typically the original expense account on the original bill.)
  4. Select Save and close.

Step 2: Pay the bill using the vendor credits

  1. Select the Plus Icon (+) at the top then Check.
  2. In the Choose a payee drop-down, select the vendor name.
  3. Leave the Check #, Date, Amount and Memo fields blank.
  4. From the Add to Check section, select Add for the outstanding bill and vendor credit.
  5. Select Save and close.

Why do I have vendor credits?

If you recorded checks for Vendors in the Checks screen and didn't enter bills, you may end up with negative balances for your Vendors.

To fix this, either go back and delete the bill payments and replace them with Check, or simply enter one or multiple bills to link the bill payments to.

To link the Vendor credits with bills, first create the bills. When you're ready to link the bills to Vendor credits:

  1. Select the Plus Icon (+) at the top then Check.
  2. In the Choose a payee drop-down, select the vendor name.
  3. Leave the amount field blank.
  4. From the Add to Check section, select Add for the outstanding bill and vendor credit.
  5. Select Save and close.
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