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Intuit

Manage vendor credits

Learn how to manage vendor credits.

There are times when you'll need to refund a vendor for a returned product or service. Instead of sending a check back to the vendor, you'll want to apply it as a vendor credit. You can also use vendor credit to make a payment to a vendor. In this article, we'll show you how to do each of these things.

Scenario 1: Create a vendor credit for returned items

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

To do this, first, enter the vendor refund check in the Deposits screen:

  1. Select the Plus icon (+) on the Toolbar 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.

Next, link that deposit to the vendor credit:

  1. Select the Plus Icon (+), then Expense or Check.

    (Note: Both Expense and Check recognize and record expenses. When you use Check, the transaction adds to the list of checks that you can print.)
  2. In the Choose a payee drop-down, select the vendor name.
  3. Leave the Reference / Check #, Date, Amount and Memo fields blank.
  4. From the Add to Expense or Add to Check section, select Add for the outstanding vendor credit and deposit.
  5. Select Save and close.

Scenario 2: Pay a bill using vendor credit

You can pay a bill using vendor credit.

First, enter the vendor credit:

  1. Select the Plus Icon (+), then Vendor Credit.

  2. In the Choose a vendor field, select the appropriate vendor name.
  3. Enter the Date, Amount, and Account (Note: The account used here is typically the original expense account on the original bill.)
  4. Select Save and close.

Next, pay the bill using the credit:

  1. Select the Plus Icon (+), then Expense or Check.

    (Note: Both Expense and Check recognize and record expenses. When you use Check, the transaction adds to the list of checks that you can print.)
  2. In the Choose a payee drop-down, select the vendor name.
  3. Leave the Reference / 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.

Troubleshoot a negative vendor balance

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 a 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 (+) on the Toolbar, 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.