- What are vendor credits?
- Creating vendor credits
- Closing a vendor credit note
- Tracking Inventory
- Other actions
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 said vendor at a later date i.e refunded, or subtracted from any future bill amount due to that vendor.
In a normal 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
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 simply by recording this amount as a vendor credit. When you apply it to the next bill in the vendor’s name, the bill amount is reduced accordingly.
Your vendor just sent you the ten boxes of phones you ordered, but two of those boxes contain damaged phones. You inform him of this and he issues a credit note towards the value of 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
- Click on the + icon either next to the Vendor Credits tab or the button placed on top right corner of the window to create a new vendor credit.
Note: To create pre GST transaction(transactions dated before 1st July 2017), click the dropdown adjacent to the +New button and select Create Vendor Credit (Pre GST)
You will be navigated to a new creation window, enter the necessary details and click Save.
You can choose to associate bill number to a vendor credit to keep track of the transaction.
Note: Associating the bill number does not apply vendor credits to the bill.
Or, you can also create a vendor credits directly from a bill in the name of the vendor. To do this,
Vendor credits can also be created by selecting a vendor from the Contacts tab. Select New transaction - Vendor credits to record the credits received from that vendor.
You can view and edit these anytime by scrolling down the Purchases tab to view Vendor credits. Clicking on the pencil icon highlighted below lets you edit the credit recorded.
You will need to enter the following information while recording vendor credits.
- Vendor name - The vendor you receive the credit from.
- Credit note # - Unique number assigned to each credit note. You can choose to auto generate your credit note number by clicking on the gear icon next to this box.
- Account - The account that you want to use to track the credit.
- Item description - An item has to be selected if you have enabled inventory for your organization.
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,
- Open the vendor credit note created and select the option Apply to bill.
- A list of the bills raised for that vendor is displayed. Select the appropriate one and specify the amount to be applied.
- The bill amount and the vendor credit are reduced accordingly.
- If all the credits are used up, the status of the note is changed to Closed.
This can also be done by opening the corresponding bill and selecting Use credits.
With a refund
If you’ve received a direct payment from the vendor towards the amount owed to you, you can record this in Zoho Books against the corresponding vendor credit note created. To do this,
- Open the vendor credit note.
- Select More – Refund.
- Specify the refund date and amount refunded before saving it.
- The payment is recorded and the credit note is closed.
The payment recorded can be deleted by scrolling down till you see the Refund history. Click on the trash icon next to the recorded payment to delete the payment. The credit note status is changed to Open.
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.
- Void - You can void vendor credits by opening the credit note and selecting More - Void. The note will be rendered invalid. This action can be reverted by selecting the void note and clicking on More - Convert to open
- Delete - You can delete vendor credits by opening the credit note and selecting More - Delete.
- Print - You can print a copy of the credit note by opening it and clicking on the print icon in the top left corner.
- PDF - Download the credit note in portable form by simply opening it and selecting the PDF icon in the top left corner.
- Sort - Vendor credits can be filtered and viewed according to the status of the credit note.
- Draft - The vendor credits that you’ve saved as draft will be in the Draft status. Vendor Credit in draft status will not have any impact in accounts, inventory or reports.
- Open - The vendor credit note has been created and is due payment by the vendor.
- Closed - The vendor credit note has been accounted for, either through a refund or by associating it to a bill.
- Void - The credit note has been made invalid.
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.
To create a Custom View:
- Go to the Vendor Credits module.
- Under the All Expenses drop down, present at the top left, select + New Custom View.
- In the following page, give an appropriate Name to your view, define Criteria, Column Preference (i.e. columns which you want to see in the filtered results).
- Click Save.
Your new custom field will now be listed under Created By Me, in the dropdown.