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Accounts Payable Basics: Create a Vendor Credit in QuickBooks

With accounts payable, your vendors send you invoices to pay for services or products you purchased from them. In QuickBooks, this transaction is known as a bill. If you return product or ask for a credit for services, the transaction in QuickBooks is called a vendor credit. This is not to be confused with the accounts receivable transaction, credit memo.

To set up a vendor credit, you’re going to go into the vendor list and select “Enter Bills”. Here, select the credit bubble. This changes the transaction from a Vendor Bill to a Vendor Credit. Then pick your vendor, and enter the amount. You may enter why they are giving you a credit in the memo section for future reference. The result of a vendor credit is going to be a debit to accounts payable and a credit to the general ledger account or item account you choose on the bottom half of the vendor credit.

vendor-credit

After you select “Save + Close”, go into “Pay Bills”. You need to check the box next to a vendor that you have created a credit for. Then select credits and apply the credit to your bill. If a vendor rewards you with a credit for damage or dissatisfaction, you can apply the credit to an open bill so that it lessens your accounts payable balance to that vendor.

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About Marjorie Adams

Our head QuickBooks trainer and guru, Marjorie Adams, is Founder and CEO of Fourlane, Inc., an award-winning consulting firm and Intuit’s #1 QuickBooks Reseller Partner. Fourlane’s team of experts offers several QuickBooks oriented services including consulting, training, programming, integration, and more. Over the years, Fourlane has helped over 10,000 customers across many different industries with their QuickBooks accounting software. Marjorie Adams is considered one of the top QuickBooks trainers in the country. She was listed on CPA Practice Advisor’s 40 Under 40 in 2014 & 2015, and has been recognized as Intuitive Accountant’s 2015 QuickBooks Desktop ProAdvisor of the Year. Marjorie sits on Intuit’s VIP Program, is a frequent contributor to Inuit Accountants News Central, and has developed Intuit’s QuickBooks Enterprise Certification training. She has also been published in The Wall Street Journal, Forbes, BusinessWeek, American Express Open, the Huffington Post, and Inc. Magazine.

3 thoughts on “Accounts Payable Basics: Create a Vendor Credit in QuickBooks

  1. julie korman says:

    I’m sorry to bother you but I cannot find anything on the web to tell me how to get a FULL credit off the credits. When I click the box it gives me partial credits. I unclicked all the ‘billable’ boxes and it still won’t give me full credit.
    we have the newest version.

  2. Kathy says:

    I received an ACH from one of the customers as payment of an invoice. Can you please help me to apply that to a certain invoice?
    Thank you so much for your help.

  3. Kit says:

    Hi Marjorie, I really need your help. I did everything you said but when I clicked on ‘Pay Bill’ I don’t see the vendor that I just created. Please help!!! Thanks!

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