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Clearing Vendor Credits

Creating a vendor credit is a simple transaction. Start by using the Enter Bills command, then mark the bill form as a credit. It’s a simple click of a button. See the screenshot below.

vendor credit

Once QuickBooks knows this is a credit, not a bill, fill in the information as normal. It’s very much like entering a bill.

Credits already existing in QuickBooks can be seen on the Unpaid Bills report.

unpaid bills report with credit

Where some users struggle is in the using of the credits against payments to vendors.

Credits must be taken against an individual bill. That is, they cannot be used on a vendor payment check without first applying them to a bill.

pay bills set credits

The left-hand arrow indicates the bill that we wish to pay with a vendor credit. Once a bill for this bill has been selected, as it has here in the screenshot, available credits will be shown in the area indicated by the right-hand arrow. In this case, we have $125 in credits to be used if we choose.

Clicking the Set Credits button will bring up a list of the available credits to choose from. In our case there is only one, the $125 credit we created earlier. Select this credit and click Done, and the Pay Bills window appears as follows.

pay bills after credit

Note the change now that we have selected a vendor credit to apply to the bill. While the original amount due still shows $1250.00, the $125… shows in the Credits Used column and is subtracted to show $1125.00 in the Amt to Pay column.

The bill payment can now be processed as normal. Be sure the correct bank account is selected, the other options chosen, and click on Pay Selected Bills. QuickBooks creates the bill payment check.


Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor


Hector Garcia

Hector Garcia

Hector Garcia is a CPA and QuickBooks Consultant.

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