Skip to main content

How to Apply Vendor Credit in QuickBooks Online

· 3 min read
Debits

Introduction​

Applying vendor credits in QuickBooks Online is essential for accurate bookkeeping and maintaining up-to-date accounts payable records. Vendor credits reduce the amount you owe to a supplier, either due to a returned item or an overpayment. This guide provides a step-by-step process to apply vendor credits in QuickBooks Online, ensuring your financial records remain accurate and balanced.

Step 1: Enter Vendor Credit​

1.1: Access the Vendor Credit Form​

  1. Log in to QuickBooks Online: Open QuickBooks Online and sign in with your credentials.
  2. Navigate to Vendor Credit: Click on the + New button in the left-hand menu, then select Vendor Credit under the Vendors section.

1.2: Fill Out Vendor Credit Details​

  1. Select the Vendor: Choose the vendor for whom you are recording the credit from the Vendor drop-down menu.
  2. Enter Credit Details: Fill in the necessary details such as the date, the affected category or item, and the amount of the credit.
  3. Save the Vendor Credit: Once all the details are entered, click Save and close to record the vendor credit.

Step 2: Apply Vendor Credit to a Bill​

2.1: Open Pay Bills Window​

  1. Navigate to Pay Bills: Go to + New, then select Pay Bills under the Vendors section.
  2. Select the Vendor: Choose the vendor whose bill you want to pay and to which you want to apply the credit.

2.2: Apply the Credit​

  1. Locate the Bill: In the Pay Bills window, find the bill you wish to pay.
  2. Apply the Vendor Credit: QuickBooks will automatically show any available credits for the selected vendor. The credit will be applied automatically, or you can manually apply it by selecting the credit in the Credits column.
  3. Review the Payment: Ensure that the correct amount is being paid after the credit has been applied. The balance due should reflect the reduction by the credit amount.

2.3: Save and Close​

  1. Save the Payment: Once the credit is applied and the payment amount is correct, click Save and close to record the transaction.

Step 3: Verify the Applied Credit​

3.1: Run the Vendor Balance Detail Report​

  1. Navigate to Reports: Go to the Reports menu in QuickBooks Online.
  2. Search for Vendor Balance Detail: In the search bar, type Vendor Balance Detail and select the report.
  3. Review the Report: Check the report to ensure that the vendor credit has been correctly applied to the appropriate bill.

Best Practices for Managing Vendor Credits​

  • Regular Review: Regularly review your accounts payable and vendor balances to ensure all credits are accurately applied.
  • Documentation: Keep detailed records of all transactions related to vendor credits, including original invoices and credit memos.
  • Reconcile Accounts: Reconcile your accounts payable regularly to catch any discrepancies between your records and your vendors’ statements.
  • Clear Communication: Maintain open communication with vendors to quickly resolve any issues related to credits or payments.

Conclusion​

Applying vendor credits in QuickBooks Online is a straightforward process that helps you maintain accurate financial records and ensures that your accounts payable reflect the correct amounts owed. By following the steps outlined in this guide, you can efficiently apply vendor credits to your bills, keeping your bookkeeping organized and up to date. Implementing best practices for managing vendor credits will further enhance the accuracy of your financial management processes.