How do I add vendor credits to a payment of a vendor

Hello @jeff-alltempente,

Welcome to the Community. I can lend a hand with adding credits to a vendor payment in QuickBooks Online.

You can use the Pay Bills feature to link or add the credits to the payment. I recommend using the Accounts Payable account to tie the refund to the vendor credit.

There are three steps you need to perform to record the transactions correctly. You'll need to enter a vendor credit, bank deposit, and use the Pay Bills option to link the transactions.

Here's how to enter a vendor credit:

1. Click the + New option in the upper-left corner.
2. Select Vendor credit or Receive vendor credit.
3. In the Vendor dropdown, select your vendor.
4. Enter the Category details or Item details. Usually, this is the category, product, or service you’re getting a credit for.
5. Select Save and close.

For the payments, you can use Bank Deposit. Please follow these steps:

1. Click the + New option in the upper-left corner.
2. Select Bank Deposit.
3. In the Account drop-down menu, select the account where you got the refund.
4. Under Add funds to this deposit, add Accounts Payable. 
5. Enter the necessary information.
6. Hit Save and close.

Lastly, please proceed with associating the credits to the payment. Please note you're not paying a bill but only using this method to link the transactions. Here are the steps you can follow:

1. Click the + New option in the upper-left corner.
2. Select Pay Bills.
3. Choose the bank deposit you just created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
4. Hit Save and close.

After following the steps above, you should be able to add the vendor credits successfully.

For additional reference, I've attached a link you can use about how to handle vendor credits in Online Bill Pay: Applying vendor credits .

Leave a comment below if you have any questions regarding entering purchase transactions and credits in QuickBooks. The Community and I will be around to help you.

Is there a less cumbersome method to handle vendor credits? Our vendors don't issue us a check, just a credit memo on account that we can later apply to a bill. Going by the method above, I'll be making transactions in my checking account that never actually took place. It should be as simple as clicking a box that says "apply vendor credit"

Hello there, @PinnacleHomeBuilding.

In QuickBooks Online, we can create a vendor credit and apply it to a bill.

Here's how:

1. Go to the +New button.

2. Select Vendor credit or Receive vendor credit.

3. In the Vendor dropdown, select your vendor.

4. Depending on how you record purchases with this vendor, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting credit for.

5. Select Save and close.

To apply vendor credits to a bill:

1. Select the + New button.

2. Click Pay bills or Pay bill.

3. Select a bill for your vendor from the list. You'll see the available credit with this vendor in the Credit Applied field.

4. Complete the rest of the fields like you normally do.

I've attached a link you can use about how to handle vendor credits in Online Bill Pay: Applying for vendor credits .

Please know that you can always get back to us if you have other questions. I'm always here to help.

When I go to PAY BILLS and select a vendor to pay, then go to the available credit field, it gives me the total of credits available from that vendor. The problem is, I want to use a specific credit amount and credit number that is linked to a specific invoice and Quickbooks just makes that decision for me. It applies the available credit from any invoice to the invoice I'm trying to pay. It's very frustrating and time consuming to fix. Is there a better way to do this??

Thanks for following along with the thread and sharing your concerns, @albeggs. I'm here to lend a hand with your concern about vendor credits in QuickBooks Online.

About this matter, ensure to turn on the setting to Automatically apply bill payments on the Account and Settings page. This way, your payments will be automatically posted to the oldest existing bill.

Here’s how:

1. Go to the Gear icon at the top.
2. Choose Account and settings.
3. In the left menu, click Advanced.
4. Go to the Automation section, and click the pencil icon.
5. Click the Automatically apply bill payments.
6. Hit Save, then Done.
   
   

Additionally, I'll share with you these articles if you want to know more about paying bills in QuickBooks Online:

• Enter bills and record bill payments in QuickBooks Online
• Enter a credit from a vendor
  
  

I’m always ready to assist you if you have any other questions or concerns about your transactions in QBO. Tag me in your reply and I’ll sprint back into action. Have a good one and keep safe.

For example:  I've entered three credit memos (one for $100, one for $50 and one for $25) for vendor ABC.  I am paying them today.  I select one bill to pay and want to select the one credit memo that is for $50 to this bill payment.  No other credit memos should be applied.  How do I make sure QB's doesn't select the $100 credit memo and only take a portion of that credit memo?