How to apply a vendor credit in QuickBooks

Intuit's method for money a supplier gives back depends on how the original purchase was recorded. A supplier credit applied in Pay bills is the route for businesses that track their costs with bills and plan to use the credit against future payments. If the purchase went in as an expense or a cheque, or the supplier is sending you money rather than a credit, record it as a supplier refund instead. Not sure which one fits? Check with your accountant.

Have the supplier's credit document to hand, and the bill it relates to, so the credit can carry the same category or item lines as the bill it reverses.

Watch for stock. If a line on the credit is an inventory item, QuickBooks returns that item to inventory when you save. Where the goods were faulty or shouldn't be counted as stock again, Intuit's suggestion is an inventory adjustment.

1. Select + New or + Create, then choose Supplier credit.
2. From the Supplier dropdown, choose the supplier who issued the credit.
3. Fill in the Category details or Item details, using the same line details as the bill the credit reverses.
4. Select Save and close.
5. To use the credit, select + New or + Create again and choose Pay bills.
6. Tick the supplier's bill that the credit should go against.
7. Look at the Credit Applied amount on that line. QuickBooks has already filled it in from the available credit, and you can change it if it needs to be different.
8. If you're paying some of the bill with money as well, set the Payment account and Payment date, and check the Payment amount on the line.
9. Select Save and close.

Saving the supplier credit records it against that supplier, ready to be set against their bills in the second stage, in Pay bills. Any inventory item on it goes back into inventory when it's saved.

Applying it in Pay bills puts the Credit Applied amount towards the bill you ticked, alongside any Payment amount on the same line.

If that bill payment is voided later, the Audit log under Settings ⚙ shows when it happened and the reason, in its History column.

If Credit Applied shows nothing, check that the supplier credit was saved under the same supplier as the bill, then open Pay bills again.

If the supplier has sent you a refund cheque for a bill you've already paid, Intuit uses a different method. It pairs the supplier credit with a bank deposit, linked in Pay bills, and it's covered in the supplier refund how-to.