Credits happen—whether from an overpayment, a refund, or a vendor adjustment. But knowing how to apply them correctly in Bill.com can save you from accounting headaches later. Misapplied credits can throw off your books, create confusion with vendors, and cause payment delays.
In this guide, you’ll learn how to apply for a credit in Bill.com to keep your records clean and your payments on track.
In general, the term ‘credit’ normally refers to an amount that’s owed to you. However, in the case of Bill.com, credit can refer to two things—vendor credit or a credit memo.
Vendor credit normally refers to a financial adjustment that you can receive from a vendor. In its simplest definition, it just means that the vendor owes you money. However, instead of giving you actual money, they give you credit, which means that your future bills with that vendor will be adjusted to reflect this credit. You may not get actual money from them, but your overall bill will be reduced to reflect this change.
Normally, vendor credits are issued in cases of goods being returned back to the vendor. For example, imagine that you brought a spare part from your vendor that turned out to be defective. Instead of paying you back, the vendor offers you credit. Now, if you purchase from the same company again, your bill will have a discount of sorts that ensures that you have to pay less. This deducted amount is the vendor credit.
Meanwhile, a credit memo is a document that’s given to the buyer by the seller, indicating that a given amount has been credited to that buyer’s account. In other words, the buyer no longer owes the seller a certain sum of money that’s written on the credit note. As such, it’s used in cases where the buyer returns goods to the seller.
Like vendor credits, a credit memo does not necessarily mean the buyer is getting money back from the seller; it simply means their bills are adjusted.
This section will walk you through the process of applying vendor credit to the bills. Before you start, please ensure that you have Pay bills permissions in your role so that you can apply vendor credits.
There are two methods to apply a credit to a bill—either from the Bill Summary window from the actual bill or from the Unpaid Bills tab.
From The Bill Summary
- Select ‘Bills’ on the navigation menu
- Next, select the ‘Unpaid Bills’ link
- Select the invoice number for the bill you want to apply the vendor credit to
- Now go to ‘Credits’ under Payment details
- Enter the amount of credit you want to apply or
- Select ‘Customize’ to edit which vendor credit(s) will be applied, and amount of each to apply
- However, if you choose not to customize, the oldest credit is applied first
- Finally, select ‘Apply’ to finish
From The Unpaid Bills
- Select ‘Bills’ on the navigation menu
- Next, select the ‘Unpaid Bills’ link
- Click the link under the Payment Amount for credit available
- Enter the amount of credit you want to apply in the Apply vendor credits box
- Select Customize to edit which vendor credit(s) will be applied, and amount of each to apply
- If you choose not to customize, the oldest credit is applied first
- Confirm the other details of the payment
- Hit ‘Pay’ to finish
On the polar opposite side, we’re going to take a quick look at how to apply credit memos to invoices. Here’s how:
- Select ‘Invoices’ from the navigation menu
- Select ‘Credit Memos’
- Go to the row of your desired invoices and click anywhere to open up credit memo details
- Select the 3 dotted ‘More Options’ button on the top right
- Select ‘Apply’
- Check the box next to the invoice to apply the credit to
- In case you want to apply a partial credit amount, adjust the credit applied amount to your desires
- Hit ‘Save’
Now that you know how credit works on Bill.com, you’re closer to mastering the software. However, if you want to know more about how Bill.com works, do check out our resource center for more how-to guides.