This article addresses how to create a Vendor Credit in your QuickBooks Online software and apply it to an open vendor bill.

A vendor credit can be used to apply to a future bill in lieu of a payment on that bill. A vendor will issue a vendor credit in lieu of a cash refund. Typically, a vendor will notify you, perhaps through email or a document, letting you know that you have a credit on file with them. They will either satisfy this credit by issuing a cash refund or just apply it to a future bill.

If the vendor only wants to apply this open credit to a future bill, then you must, in your books, create this credit on file, so you can keep track of it.

To create a vendor credit in your QuickBooks Online software:

1. Go to the “Create” button on the left side.
2. Click on “Vendor credit” underneath the Vendors menu.
3. Fill in all the appropriate fields within this function. Be especially careful of the Category (Account) that you choose here. You may want to consider the same expense account that you utilize in a typical bill from this vendor.
4. Save and Close.

To apply this credit to a vendor bill:

1. Go to the vendor bill and click on “Mark as Paid”.
2. Within the Bill Payment screen, scroll down to the outstanding bill and credit.
3. Click on the bill you want to apply the credit to.
4. Click on the credit you want to use to apply to that bill.
5. Both the chosen bill and the chosen credit should have the exact same payment amounts. To be sure, scroll back up and notice the total payment amount should now be zero.
6. Save and Close.

Review an Unpaid Bills report to be sure all was done correctly here.

Note: AccuraBooks is a bookkeeping firm only, so please consult with your C.P.A. for verification and clarification about the contents of this article.