Vendor Credits

What are vendor credits?

Vendor credits are credits that you receive from your vendor, and is treated as an equivalent of physical cash that the vendor owes you. This helps you track the money you’re owed until it is either paid by the vendor at a later date i.e refunded, or subtracted from any future bill amount due to that vendor.

In a general scenario, the vendor issues you credits via a credit note. You can record this in Zoho Books as a vendor credit note and track the money you’re owed.

When to record a vendor credit in Zoho Books

  1. Change in Amount: You make an advance payment to your vendor, and the final bill amount comes out lesser than the amount you paid. The vendor simply keeps the rest of the money and issues equivalent credits in your name. You can track this in Zoho Books by simply creating a vendor credit for the amount. This vendor credit can be applied to the next bill in the vendor’s name and the bill amount is reduced accordingly.

  2. Change in Quantity: Your vendor sends you the ten boxes of phones you ordered, but two of those boxes contain damaged phones. You inform him about this and he issues a credit note towards the value of the phones in those two boxes. He will apply these credits to the next invoice he sends you, but how do you track this internally to make sure he does? The answer is vendor credits.

Creating vendor credits

Creating a vendor credit

Vendor credits can also be created by selecting a vendor from the Contacts tab. Select New transaction and click on Vendor credits to record credits received for that vendor.

New vendor credit

You can view and edit these anytime by selecting any particular vendor credit and clicking on the Edit button on top of the page.

Editing a vendor credit

Mandatory fields

You will need to enter the following information while recording vendor credits.

Closing a vendor credit note

By applying to bill

Vendor credits can be applied to a bill raised for the same vendor. Doing so will reduce the bill amount accordingly. To do this,

Applying credits to bill

Alternatively, Vendor Credits can be directly applied to Bills for the particular vendor:

Use credits

With a refund

If you’ve received a direct payment from the vendor towards the amount owed to you, you can nullify the vendor credit note created for that vendor. To do this,

Recording a refund

New Refund

You can see the amount refunded by scrolling down till you see the Refund history. To edit it, click on the edit icon next to the amount refunded. To delete it, click on the delete icon next to the amount refunded.

Deleting the payment

Tracking Inventory

If you have enabled inventory for your organization and raise a credit note towards returning some items to a vendor, your stock quantity will automatically be adjusted when you record the credit.

This is handy for scenarios where you need to return damaged goods to your vendor, but have already recorded these as stock in Zoho Books. You do not need to manually adjust this quantity when you return the goods. Instead, simply specify the quantity while recording the credit, and this will automatically be adjusted in your Zoho Books items list.

Learn more about inventory here.

Other actions

Other actions

Vendor Credis can be filtered based on their status:

Filtering vendor credits

Custom Views

Custom Views are specific filters to list your vendor credits, based on your criteria.

For example, out of all your vendor credits in Zoho Books, you might want to view those vendor credits that are greater than $1000.

With Custom Views, you can simply create this filter. All you have to do is set criteria and later use it to classify data.

You can find an example GIF image to understand how custom views work.

Custom view of invoices

To create a Custom View:

Your new custom field will now be listed under All Vendor Credits in the dropdown.

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