Vendor Credit applied to a Customer Invoice

I've got the procedures so you can record a credit memo and apply it to your vendor's invoice, Pinky.

Do you mean your vendor recorded a Vendor credit (money you owe them) and has used it to pay their invoice? If so, you can create a Credit memo for them and then apply it to their invoice using the Receive payment feature. This allows you to reduce or clear off their balance using the credit amount.

Here's how:

1. Go to the + New menu, then Credit memo.
2. Choose your Customer and enter the Credit Memo Date.
3. Enter the Service Date, Product/Service, and Quantity.
4. Double-check the accuracy of the Rate and Amount.
5. Once done, hit Save and close.
   

    

After that, link the Credit memo to the invoice:

1. Go back to the + New menu, then Receive payment.
2. Choose the appropriate Customer.
3. Select the invoice from the Outstanding Transactions section and the credit memo from the Credits portion.
4. Double-check everything, and once done, hit Save and close.
   

However, if you mean directly linking a vendor credit to an invoice, this is not an option in QBO. Customer and vendor credits are tracked separately for financial accuracy. You can check with an accounting professional to help you handle this matter accordingly.

You can also review this article to guide you through processing exchange products or services between you and your vendor: Record a barter transaction.

Additionally, you may run and customize your reports to check your company's profitability and upcoming expenses. This way, you can track your business's cash flow accordingly.

Finally, you can also explore our QuickBooks Live Bookkeeping offering, which can help you manage your accounting needs. Our dedicated experts are ready to assist in tracking your record's preciseness so you can run your business confidently.

If you have more questions about handling customer credits in QBO, hit the Reply button. We are always here to help.

YES! This is it! Thank you!

This is similar to my issue. I do warranty repair for XYZ company. I also purchase parts from the same company. The twist is I use projects to track the item, and the end user as a sub-customer of XYZ company that will ultimately pay the invoice for the repair. When XYZ pays for the repair, it is done by credit memo. Then, I must balance the books by applying it to the repair invoice and the bill for the parts ordered and purchased through XYZ company.  thus my vender is also a customer. How do I do that?

thank you

Thank you, but how does that work if I use a Purchase Order to order parts for multiple projects on the same PO?

You can definitely create a Purchase order for multiple projects on the same Purchase Order, whiteghost. Let me provide the outlined steps below.

1. Go to + New, then select Purchase order.
2. Select the Vendor.
3. In the Item details section, enter the parts you want to purchase.
4. Choose the Project you want to link the item to.
   
5. Enter the amount.
6. Click Save and Close.

Once done, you can record it as a bill. Since it involves multiple projects, you need to remove the line when recording it to ensure separation. Here's how:

1. Open the Purchase order you created.
2. Click Copy to Bill.
   
3. Find the item you need to remove and click the trash bin icon.
4. Select Remove line.
   
5. Hit Save and close.

Furthermore, after making a payment for your vendor, you can use this link as a guide to record the bill as paid: Pay Bills.

Additionally, you'll need to create an invoice and credit memo to the sub customer since they will be the one who'll pay for the invoice. You can open these articles for references:

• Create invoices in QuickBooks Online
• Create and apply a credit memo

This ensures that your accounts reflect the flow of parts and repair transactions accurately across your books. Leave a comment below if you need further help with purchase orders and I'll be here to assist you.

OK, but please explain why I must "remove the line"?  The customer and the Vendor are the same company, and I have two separate profiles, a customer and a vendor. I understand how to connect the Project to the line item, however, some parts that would be covered under a warranty repair are also stock items that I would not order just one. Should I add an extra line to my PO and duplicate the part in the order so I can dedicate that part to the project, or is there another way?

@whiteghost 

"When XYZ pays for the repair, it is done by credit memo. Then, I must balance the books by applying it to the repair invoice and the bill for the parts ordered and purchased through XYZ company. thus my vender is also a customer. How do I do that?"

Is there a reason you need to use a credit memo?  What about using a bank Clearing Account from the solved solution?  Does that not work in your case?  That way, you don't have to worry about projects/customer/sub-customers/vendors - you just pay the vendor bills with the Clearing Account and receive payment into the Clearing Account on the customer invoice.  That applies the amount you owe XYZ (A/P) to reduce the amount due on the customer's invoice (A/R).  

Yes, I am a repair shop, I need to keep records of all warranty repairs and the details of those repairs. I also maintain a parts inventory. Some of my vendors pay the warranty service with a credit memo and I do use a bank clearing account., because the vender is also a customer,[parent customer]  to the end-user/owner of the warranteed item. If I can't do all of that In one place, what good is it to duplicate the work and waste money with the extra time it takes to duplicate searchable data.