Receive a credit note from a creditor

If you receive a credit note, you create a new entry for this in a purchase journal. A credit invoice is the opposite of a normal purchase invoice: for a purchase invoice an outstanding item is created that you pay, whereas for a credit invoice your creditor refunds an amount.

In practice, a credit invoice will often be offset against an outstanding item and you only pay the difference.

Example:

A creditor has sent you an invoice for 10 lamps with a value of €1,000.00. After delivery, it is discovered that two lamps are irreparably damaged and therefore you receive a credit invoice for € 200.00 from the creditor.

You add the invoice and the credit invoice in Profit. As a consequence, two outstanding items are created of which one is for a 'negative' amount. If you settle the credit invoice against the original outstanding item, there is a difference of €800.00. You pay this amount to your creditor.

If you have already paid the invoice in full then you still need to receive € 200.00 from your creditor. After receiving this amount in cash or via the bank, you reconcile the receipt against the 'negative' outstanding item of € 200.00.

With the entry of a credit invoice, the VAT is also contra entered. When you enter a normal purchase invoice, you debit the Te vorderen btw account. With a credit invoice, you credit this account.

You can process credit notes in your administration in three ways:

• Your supplier repays the credit amount

  You record a new credit invoice. As a consequence, a new outstanding item is created against the creditor but, this time, with an amount to be received. When you receive this amount, you reconcile it with the outstanding item for the purchase invoice.

• Set off the credit note against an old purchase invoice

  If you still have to pay purchase invoices, you can settle the outstanding amount with the amount of the credit invoice.

• Settle the credit note with a new purchase invoice

  You add the credit note in the usual way. When you add the first normal purchase invoice after this, you can settle it against the credit invoice.

Enter a credit note

In the procedure below, you enter the original credit amounts as debit amounts and vice versa.

To enter a credit note:

1. Go to: Financial / Enter / Journal.
2. Check Financial year and Period. These are the financial year and the period in which you post the entry.
3. Select the correct purchase journal.
4. Click on: Finish.
5. Select the creditor in Account.
6. In the Amount debit column, enter the gross invoice amount. Do not enter a minus sign in front of the amount.

   Profit asks if the due date should be set to the invoice date. If it has been agreed with your creditor, you can decide that this credit amount should be paid directly.

7. Go to: the next entry line.
8. Select the contra account (a cost or stock account).

   Profit proposes the net amount automatically using the VAT code. The net amount appears in the Amount credit column.

   

9. Click on: Finish.

Reverse a credit note in the purchase journal

When you reverse an entry, you enter negative amounts (with a minus sign):

• You enter the original debit amount again as a debit amount but this time with a minus sign.
• You enter the original credit amount again as a credit amount but this time with a minus sign.

You can only enter negative amounts if you have selected the Allow negative amounts field on the General entries tab for Financial / Management / Administration settings.