Purchase Credit Note Refund Reconciling

I’m hoping to clarify exactly how purchase refunds (credit notes) work.

I import an invoice through Receipt Hub, add the details to it and then tag it against the corresponding bank account transaction which gets imported from my bank.

Purchase Refunds
I would expect this to be the same as purchases, except the amount is negative.

However, it seems there is only 2 ways to create Credit Notes:

  1. Create the credit and then also create a new bank transaction for the amount of the credit.
  2. Create the credit and then also mark it as refunded against an invoice from that supplier.

Neither of these methods allow you to reconcile/tag it against the imported bank account transaction. This thread (and others) suggest deleting the untagged imported bank transaction which seems odd to me since that’s the legitimate correct bank transaction which was imported from the bank, the newly created one is manually created so has more chance that it could be wrong. This also means I need to manually check that the amounts match and manually delete the second transaction.

Just want to make sure I’m not missing something here as I was trying to do this at 10pm so probably wasn’t thinking very clearly!

When tagging the bank entry (refund from your supplier) on your bank account screen, just click “Refund from Supplier” after clicking on Tag me. Enter suppliers name and the invoice (list of invoices if more than one) should show up.

Hope this helps

Thanks that’s definitely a lot simpler, but then should I not also record the actual credit note somewhere so that I have proof for VAT?

The method rhc suggests will record a credit note, but it is only applicable in one specific case - it will only let you select a single fully paid up purchase whose total value exactly matches the refund amount, and will make a credit note that refunds that purchase in full with the net and vat values matching the original purchase and the credit note date set to the date of the bank transaction.

If your situation doesn’t fit this pattern - if the supplier is crediting a purchase in part rather than in full or if the credit note date needs to be different from the date of the refund transaction - then you’ll have to create the credit note from the purchase end, let it create the tagged refund transaction and then delete the untagged duplicate from your bank feed.

For the case of non-matching dates you have to create the initial credit note as holding funds on account, then go to the unallocated payment and “refund balance” in order to create a bank transaction on a different date from the date of the credit note.

Yes, it’s rather long winded and there have been a number of requests over the years to make credits behave more like regular invoices.


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