Hi Team,
Using Quickfiles with great success, really pleased with the platform, would love to see stock control and SAP.
I have an technical enquiry regarding credit notes which I can’t seem to find the answer too within the knowledge base or forums.
Context…
As it stands you seem to have two ways of dealing with supplier credit notes. Physical credit i.e. Full or Part refund credited back into the bank account which appears on the bank statement (hard cash returned), or credit on account, whereby money is owed to the merchant and is offered as credit against future purchases, in both eventualities these assume that one has paid the supplier invoice in full and the a refund happens after the supplier invoice has been settled.
We make various purchases throughout the month from our supplier. The supplier will issue the invoices upon dispatching goods. Upon receipt of goods we might reject or return some items. Our supplier will issue us with a separate credit note (5 days later) that will correspond with the original invoice. (Simple!) At no point have I paid for these goods (we pay at the end of the month when the statement comes in).
Query…
I input the original invoice on to the purchase ledger i.e. £100 Goods, I then enter the credit note against that original invoice i.e. £20 credit note. Balance to pay is £80.00
What I find is that the credit note is showing up as -£20.00 on the bank statement or as a credit on account against the supplier. Perhaps I am confusing myself here and please do correct me if I am wrong, however the only way that I seem to be able to get the credit not to appear as credit on account or as refund on the bank statement is simply to deduct the credit note from the original invoice and enter this value as the total invoice amount. Is this correct?
Many thanks for your advice and guidance, much appreciated.
I just want to be sure we’re on the same wavelength if that’s OK?
So your invoice has not been paid, and is outstanding in full, is that right? If so, it shouldn’t be creating any bank entries as nothing has been paid in the first place - it should just reduce the balance of the invoice.
Hi, Thanks for the quick response. That’s right, so the invoice is outstanding. Perhaps we have got it wrapped around our necks. I am working with my book keeper on Friday, so we could give you a real world example then if this helps.
In effect when our statement comes through from the supplier the credit has been deducted on from the outstanding balance on the account.
When you create a credit note against a purchase that is not fully paid it gives you the choice between refunding payments already made or reducing the unpaid balance. The credit should only show on your bank account if you chose the “refund” option.
What happens or how do we deal with a situation whereby a supplier invoice has been paid in full and the supplier then issues a credit pertaining to that original invoice in the following month, thus reducing the balance of that months money owed? Many Thanks!
I always try and mirror as close as I can what the supplier has told me. So if they issue a credit note that references their invoice X then I would credit the matching purchase in QuickFile, hold funds on account, then use the credit to part-pay one of the following month’s invoices. The remaining balance on that month’s invoice(s) should then match what the supplier thinks you owe them.
You could of course just part-credit one of the unpaid invoices (“reduce unpaid balance”), which would have the same overall effect, but I prefer the credit note on the QuickFile side to link back to the same purchase that the supplier thinks they have credited.
So followed your logic for option 1, which is to mirror what the supplier have issued (which is our preferred option).
So I allocated the credit note against the already paid invoice as funds held on account.
So when I select the next months invoices to be paid (as per money out of the bank) and include the credit note in that selection, the system generates a message that says… ‘At least on of the purchases selected has already been paid’ and it then unchecked the credit note!
You need to start from the purchases list rather than the bank account - find one of the unpaid purchases in the list, click the drop-down arrow next to the “UNPAID” badge and select “record a payment”, and there should be the option there to “apply from credit”. When you’ve done this the purchase will show as partially paid rather than unpaid, and when you come to tag the bank transaction the outstanding balances should all add up nicely.
We are working from the purchase list already accessed via the individual suppliers account (Supplier > Search > Specific Supplier > Recent Purchases > Show All)
There is the option to select multiple unpaid purchases and then at the top you can click ‘Update as Paid’. So lets say I am marking all of august’s invoices for that given supplier, I check all the invoices pertaining to the supplier statement, I then also check the credit note which was allocated as per above, the running total is correct an correlates with what I have paid my supplier, I chose ‘Update as Paid’ and I get the aforementioned error message.
Hi Thanks for the response! I’m getting a little lost here! I don’t understand what you mean by Go into the invoice itself. Which Invoice? The invoice that was already paid previously or one of the outstanding invoices in the current month?
Any one of the outstanding ones for the current month - if the credit is more than the value of one invoice then you’ll have to keep doing “apply from credit” on one invoice after the next until the credit runs out, then you can log a payment in bulk to clear whatever is still left “unpaid” or “partial”.
We are sat here scratching our heads… Lets start again, please take us through it…
We have an November supplier invoice for £458.33, for screws purchased, paid in full on 6th of December. On the 8th of December we received a credit note for £18.44 relating to the invoice £458.33. So lets get this clear, The original Invoice has been paid (alongside others prior to credit note being issued!)
In December we then have multiple invoices from said supplier for additional good purchased. They (supplier) provide us with a statement at the end of December, which includes the previous credit of -£18.44. The managing director (me) then pays the statement in full via BACS.
The account lady, comes along and wants to reconcile the bank statement to the supplier invoices/statement. Please give us a step by step guide how to deal with this. (We know how to raise supplier invoices by using the new purchase tab in a supplier account) credit notes we are still struggling with!
So you have one purchase record for November for £458.33, against which you raise a credit note for -£18.44 and hold funds on account. If you look at the summary page for this supplier now you’ll see £18.44 under “prepayments”.
You then create purchase records for all the December invoices in the normal way, and they start out as “unpaid” initially.
Now choose any of those December purchases (I would start with the earliest one) and “record payment” against that (single) purchase using the “apply from credit” option. If that purchase is for more than £18.44 it will now show as partially paid, if it was £18.44 or less it’ll be fully paid so repeat this process with another purchase until the credit is all used up. If you go back to the supplier’s summary page you should now see the outstanding amount equal to what the statement says you owe.
Finally you can log a bulk payment for that amount to clear all the remaining purchases, either from the list of purchases for that supplier (tick all the December purchases that have not been paid off in full from the credit and “Update as paid”) or by tagging from the bank account side (payment to a supplier, pay down multiple invoices).
Hi Thanks for your response again! So when we record a payment and we tick apply from credit, do we have to also fill in the amount box?
The reason I ask is when we followed your instructions, we get a partially paid status against a December invoice (£34.56), but when we reconcile the remaining December invoices by ticking all the boxes to give us a subtotal for outstanding balance, the credit is not deducted from the balance.
I’m afraid QuickFile doesn’t offer telephone support. Although as a side note, @ian_roberts is another user of QuickFile who very kindly assists on the forums.
Correct. As you’ve used the credit, you would have reduced the outstanding balance.
That’s also correct. Ticking the boxes down the side doesn’t take into account the outstanding balance, but rather shows the total balance.
OK, so where can I see the outstanding balance. Problem being for me sins, we are retrospectively doing a years accounts (sorry I know bad practice) and thus the outstanding balance on the suppliers account will be inclusive of the reaming 5 months to year end!)
Are you sure this is the case with ticking the boxes down the side as we have had instances whereby the credit note is in the same month and the statement has matched the checked boxes
Moving forward we will be doing accounts monthly, if not weekly.
While it’s true that the little orange pop-up counts the invoice totals rather than the outstanding balances, when you click “update as paid” and the “allocate one lump sum” option, the total it gives you in there will be the correct one accounting for the partial payments.
Yes, the orange box will always be the invoice total. However, if you tick both the invoice and it’s matching credit note, then you will see the sum of those two items, which may be what you’ve seen previously.
If your invoice is £100 for example, and you have a credit note for £20, then ticking the two will give you a total in the orange box of £80.
