Create a purchase credit note
A purchase credit note is a credit from your supplier that reduces what you owe them — for example after you return goods, are over-charged, or agree a discount after the bill. Issuing it posts to your accounts: it reduces accounts payable, reduces the original expense or asset, and reduces the input VAT you had reclaimed.
Before you begin
- You need the supplier on file.
- Your Accounting Settings must be configured, because issuing a credit note posts to your general ledger.
- If the credit relates to a specific bill, have that purchase invoice to hand.
- To mark a line as returned stock, the product must be set to Track inventory and For resale. See Inventory and cost of goods sold.
Steps
- Go to Purchases → Purchase Credit Notes and select New (Create Purchase Credit Note).
- Choose the Supplier.
- Optionally choose a Related Purchase Invoice if the credit relates to one.
- Set the Date, choose the Currency and, if you wish, a Due Date. Add Notes if useful. The credit note is posted to your accounts on this date — not on the day you issue it — so it counts in that month's figures and VAT period, and a date inside a locked period will be refused.
- Under Line Items, first check the Amounts are selector above the lines: Tax exclusive (the default — prices are net, VAT added on top) or Tax inclusive (prices are gross with the VAT extracted, matching the gross figures on the supplier's credit note). Then add each line with a Description, Quantity and Unit Price, and a Tax Rate if VAT applies. Choosing a product helps Sales Scribe work out the right posting account, shown in the read-only Posting box.
- For a physical return of stock, tick Returned on the line. This box is only available when the chosen product is inventory-tracked and for resale.
- Check the Subtotal, Tax and Total, then select Create Draft.
- When the credit note is correct, open it and select Issue. The dialog shows, under Where the credit goes, how much will come off the bill it names and how much will stay on the supplier's account — worked out from what the bill still owes as you open it. Select Issue Credit Note to confirm.
[Screenshot required: Create Purchase Credit Note line with the Returned tick box and Posting field]
What happens next
While it is a Draft, the credit note has no effect on your accounts and can be freely edited or deleted.
When you Issue it, Sales Scribe:
- gives it a document number and sets its status to Issued;
- posts the credit to your ledger — it debits accounts payable (reducing what you owe) and credits the expense/asset and input VAT accounts;
- locks it from further editing.
If the credit note names a bill, issuing also applies it to that bill — as far as the bill still owes:
- The bill still owes more than the credit: all of the credit comes off the bill.
- The bill owes less (it is part paid): the credit settles what the bill still owes, and the rest stays on the supplier's account, to apply to another of their bills. The confirmation says how much went where.
- The bill is already paid in full: the whole credit stays on the supplier's account, and the confirmation says so.
Once issued, you can apply the credit note to purchase invoices to reduce their outstanding balances.
Important notes
- Only a Draft can be edited. Once issued, a credit note is part of your records — to cancel it you void it (only possible while it has not been applied to any invoice).
- The credit note's currency must match the invoice you later apply it to.
- Marking a line returned without an inventory-tracked, for-resale product is not possible — the tick box stays disabled with the hint "Select an inventory-tracked product to enable".
Troubleshooting
- "Purchase credit note total must be greater than zero." — add at least one priced line before issuing.
- A message about accounting settings. Issuing needs the relevant ledger accounts configured. Set them under Settings → Accounting, then try again.
- A line needs a tax rate. If a line has a tax amount but no tax rate assigned, assign one before issuing.
- A message about a reverse-charged bill line. A credit against a bill recorded with a reverse-charge rate must use the same reverse-charge rate, so the self-accounted VAT is unwound along with the money. Change the credit line's tax rate to the one named in the message.