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Negative invoice from supplier

Hi there,

There is a bug in your credit note workflow. When I raise a credit note (as an invoice for a negative amount) I am prompted for a payment due date when this field does not exist in the form. If I attempt this procedure from another part of the supplier screen, I am forced to choose a bank account for a refund when I want the credit note to be unpaid on the supplier account.

Could you let me know when this will be fixed? The way that credit notes have been implemented on QF is very odd…

Thanks,

James

Hi @jamespbmatt2

This certainly shouldn’t be happening. As you rightfully mention, this isn’t required for a credit note. We’ll check this out on our end and then pass this to our development team.

Can I just clarify that you want the credit to sit on the supplier record as a prepayment, rather than an actual refund?

It’s not a payment on account (which is a less confusing term than ‘prepayment’ for us accountants). It is a negative invoice that should sit on the suppliers account and be netted off against future positive invoices. Not all credit notes are raised against specific purchase invoices. Sometimes a supplier just wants to give you a negative invoice for some reason.

Treating a credit note as a ‘prepayment’ would probably mess up the VAT treatment

For the purpose of QuickFile, it would be treated as a prepayment (which is just funds held on account). VAT would be calculated on this if you’re on cash accounting.

If it’s just a discount for future use, the better option may be to add a negative line to a future invoice.

I would assume that when they invoice you in the future it would show a discount of some sort to account for this adjustment, which you would just include as a separate line on the invoice.

This is incorrect from an accounting point of view. A credit note is not a payment on account/prepayment. It is a legal document that has an official accounting definition. It needs to be included in the VAT returns regardless of whether it’s accrual or cash accounting.

A credit note would not be included on a future invoice. It would appear as a negative line item in a statement of account.

Let me restate the issue another way:

A supplier has issued us with a credit note. How do I add it to their account? The credit note does not relate to any specific prior invoice. It will not be refunded in cash. It needs to appear correctly on our VAT return (accrual basis).

How do I achieve this?

Thanks for your replies @jamespbmatt2.

In QuickFile, the way to do this would be to record it as a credit on account. A negative invoice would achieve this. As standard, you can only post this as a refund to a bank account rather than a credit on account, but we can enable this on your account if you wish (it’s currently in testing).

This would:

  • Be accounted in the VAT return
  • Sit as a credit on the supplier’s account to be used against future invoices
  • Give you an entry as a credit note
  • Be accounted for on the nominal ledgers

If you would like me to enable this on your account, just let me know and we can get some account details from you to enable it.

Hi Mathew,

Yes please implement this bug fix ASAP.

I’m very surprised that this has never been raised before. Credit notes are a standard transaction in every other general ledger I’ve seen in over 20 years of accounting!

Thanks for your help,

James

It’s been raised many times over the years (most often by @Lurch) but I guess the case of having a credit note as the first thing you receive from a new supplier with no prior purchases at all to offset it against is sufficiently rare that the workaround of “just create the credit from a previous purchase, even if it’s not technically related to that specific purchase” is sufficient for most people.

That’s what I’ve been doing for years with one supplier who sends me a “retrospective rebate” at the end of each month - essentially a “cashback” percentage of that month’s spend. It doesn’t technically pertain to one specific purchase but I handle it by crediting against any available paid-up purchase, so I can hold the credit on account against our first purchase the following month.

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We’ve been using the supplier in this instance for many years. It’s just that the credit is larger than any of their previous single invoices.

As I say, completely standard transaction in Sage, SAP, JDE, Xero, Quickbooks etc. I wonder whether anyone on the product team at QF is actually an accountant.

@jamespbmatt2 as @QFMathew mentioned, the ability to create a credit note without assignment to a previously issued invoice was a feature we implemented several months ago and is currently in develoment mode (meaning it must be manually activitated on your account). If you message one of us with your account details we can enable that for you.

Surprised I’ve never heard of this as I do mention it at least once a week and end up with all sorts of stuff I don’t want on stock as I dread getting credit notes from suppliers for materials I don’t need…

Hi @Lurch

Do you mean holding the negative invoice on a supplier account option?

No the development group mentioned by Glenn.

Apologies for any confusion. What @Glenn refers to above is us just enabling specific test features on accounts. There isn’t a development group as such, but we regularly open up test features to a small number of users before releasing them to the wider userbase.

Hope that helps!

No I get that, just that I moan about it almost daily but randoms from the forum get the feature before me.

We don’t preference any of our users before any others.

But can I just ask, do you mean the feature I mentioned above (the hold supplier credit on account)?

Not intentionally I guess no, wasn’t accusing anyone of doing so though.

Still no.

I wouldn’t describe myself as a random - I’m the one who fixed depreciation for these guys! They used to think that it should be listed under Current Liabilities on the Balance Sheet :rofl: . I’ve spotted quite a few other bloopers as well. Maybe there should be a bug bounty.

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