FCC Admin Tasks - Handling Vendor Credits

Handling Vendor Credits

Typically vendor credits are issued when you return an item or successfully disputed a vendor charge that has cleared the bank and has been recorded in QuickBooks. The process is handled based on whether you have arranged for a reimbursement or agreed that the credit be held on the church account with the vendor. If given the option by the vendor, you should specify that they should issue a reimbursement.

Additional situations are explained on the QuickBooks support page Enter vendor credits and refunds in QuickBooks Online.

Vendor Reimburses the Credit Amount

The following text was adapted from a QuickBooks Community page.

You will record a vendor credit and encode it such that it hits the same expense account of the original purchase. Then, enter a bank deposit from the refund check or bank credit and link both transactions using Pay Bills.

First off, enter a vendor credit. Here's how:

Click the + New button, then select Vendor credit.
Choose the vendor from the drop-down.
Select the Category details or Item details to match the original expense.
Hit Save and close.

Then, record a bank deposit to the refund check.

Click the + New button and choose Bank Deposit.
Select the appropriate bank account where you got the refund.
In the Add funds to this deposit section, fill out the following fields.
- Received from: Select the vendor who gave you a refund.
- Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit.
- Payment method: Enter the method your vendor used to refund you.
- Amount: Enter the amount of your refund.
Click Save and close.

You can now link the bank deposit to the vendor credit using Pay Bills.

Click the + New button, then select Pay Bills.
Choose the bank account to match the deposit created above.
Check the checkbox beside the vendor's entry in the list. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
Hit Save and close.

Vendor Holds the Credit on the Church's Account

You will record a vendor credit and encode it such that it hits the same expense account of the original expense. When a subsequent invoice is received from the vendor, instead of recording an expense, you should record it as a bill.

First off, enter a vendor credit. Here's how:

Click the + New button, then select Vendor credit.
Choose the vendor from the drop-down.
Select the Category details or Item details to match the original expense.
Hit Save and close.

Upon receiving a subsequent invoice or charge from the vendor, create a bill.

Click the + New button and choose Bill.
Encode the bill in the same manner you would encode an expense. At a minimum:
- Choose the vendor from the drop-down.
- Enter the date of the vendor charge.
- Select the Category details or Item details associated with the charge.
- Click Save and close.

Then, apply the vendor credit toward paying the bill.

Click the + New button, then select Pay Bills.
Choose the bank account to use if the amount of the bill exceeds the available credit.
Check the checkbox beside the vendor's entry in the list. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment will reflect the amount that the bill exceeds the credit. If the bill amount is the same as the credit amount, this should be $0.00.
If payment is due and you do not want to print a check such as in the case that the vendor is normally paid by debit card or ACH, make sure you uncheck Print Later and make a note in the reference number.
Hit Save and close.