A vendor credit is when you receive a credit from one of your vendors. To represent credits you owe your customers, see credit memos.
There are a few ways to represent receiving credit from a vendor in Ambrook.
Option 1: Negative Bill Line Item
If vendor credits are an infrequent occurrence for you, the easiest way to represent a one-off credit would be to create a negative line item on the bill from that vendor where you applied the credit.
When you receive the bill where the credit was applied, go to Bills.
Create a New Bill with all the bill information.
Add a negative line item to the bill in the amount of the credit you received.
Create a new line item
Enter a negative number in the total box (see example below)
Categorize the credit line item to the same category as the initial purchase.
For example, if you received a credit on parts you purchased from the hardware store, the original purchase would be categorized as a parts expense.
Categorize the credit line to the parts expense category as well. This will reduce the total parts expense on your books to match the amount you actually spent on parts with that vendor.
The bill should now reflect the amount you actually paid, minus the credit.
Match the bill to your payment on the Ledger, or pay it via Wallet as you normally would.
Note: You cannot save a bill where the total amount is negative, so you’ll want to record the credit as a line item on the bill you apply the credit to, rather than as a standalone bill.
Option 2: Vendor Credit Contra-Liability Account
If you receive credits often from certain vendors, or received a large credit that you won’t be using until much later, you may want to keep track of the credits on your Balance Sheet with a contra-liability account.
Using a contra-liability account to track vendor credits will act as a reduction of your total liabilities, counterbalancing Accounts Payable. This method ensures that in the interim between receiving and using the credit, it is represented on your books.
Set up your credit account:
Go to Balances
Create a New Account
Choose “Other Current Liability” as the account type
Set the starting date to the date you’re starting your books in Ambrook, and the starting balance as 0 (unless you had credit on file when you started your books in Ambrook)
Ensure the direction of the starting balance is set to contra-liability
Name the account. If you receive credits from multiple vendors, you may want to create a separate account for each to make it easier to keep track of your credit balances.
Create the credit:
When you receive a credit from a vendor, take these steps to record it.
Go to the Ledger -> New -> Transaction
Choose the vendor credit account
Create the credit for the amount you received from the vendor
Now, when you go to the Accounts page, you will see the balance of that vendor credit account under liabilities.
Apply the credit:
When you are ready to apply the credits:
Go to Bills and create a Bill for the purchase with the vendor
Save the bill as open
Click the three dots next to the bill -> Record New Payment
Choose “Transaction” as the payment type
Choose the vendor credit account
Add the amount of the credit that was applied to the bill
Save the transaction.
Use the "Match Payment" button on the bill to match any other payments from the Ledger to mark the bill as fully paid (if the full amount wasn't covered by the credit).
The transaction you created will counterbalance the original credit you recorded, resulting in the vendor credit Contra-Liability account on the Accounts page being zero.