Creating vendor credits In QuickBooks Online

 Creating vendor credits

Vendor credits refer to reimbursements for goods or services, or allowances granted on an account subsequent to the vendor's issuance of the invoice and the client's recording of it in QuickBooks Online. These credits are logged as a debit to reduce accounts payable.

A vendor credit can then be: 

• Applied to an existing bill 

• Held as open and applied to a future bill 

• By default, QuickBooks Online automatically applies the vendor credit to the oldest bill for that vendor. 
• If clients want to apply the credit manually, they can disable that option by going to the Advanced tab in Account and Settings and disabling the Automatically apply credits slider.
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In that case, after creating a vendor credit, the client has to manually choose the bill to apply the credit to on the Pay Bills screen.

Creating and applying a vendor credit 

Let’s see how to record a vendor credit for a client who has the Automatically apply credits option turned on. 

1. To access the Vendor Credit screen, select + New, and then Vendor credit. Alternatively, select New transaction from the Expenses center and then select Vendor credit
2. In the Vendor Credit screen, from the Vendor dropdown, select the vendor the credit is from 
3. Next, set the Payment date of the credit 
4. In the Item details grid Product/Service column, select the item the vendor credit is for 
5. In the Description column box, add a note explaining the credit
6. Set the Rate and the Quantity of the credited item 
7. In the Customer column, add the customer the item was ordered for 
8. In the Memo field, your client can add additional notes 
9. Then select Save and close 

Now let’s go and see the vendor credit and apply it to a bill.

1. From the left-hand navigation, select Expenses.  
   Here, your client can see the vendor credit and the original bill
2. Find the original bill of the returned item. Select the dropdown icon in the Action column and select Mark as paid  
   
   In the Bill Payment screen, we can see that QuickBooks Online has already applied the vendor credit, reducing the amount payable.