How to Record & Apply Vendor Credits

Every once in a while, a vendor ends up owing you money instead of the other way around. Maybe you returned a faulty product, a vendor accidentally overcharged you on a bill, or a contractor refunded part of a deposit. MonkeyPod's Vendor Credit feature lets you record these situations accurately, so you can easily apply the credit toward what you owe that vendor in the future.

What is a vendor credit, and when should I use one?

A vendor credit represents money a vendor owes your organization: a reduction in what you owe them, or an actual refund of money already paid. Recording it keeps your Accounts Payable balance accurate and makes sure you don't accidentally overpay (or lose track of money you're owed).

You'll typically record a vendor credit when:

  • A vendor issues a credit memo: you returned goods or canceled a service, and instead of refunding you in cash, the vendor reduces what you owe them on future bills.
  • You were overcharged on a bill: the vendor catches the error and applies a credit to your account rather than sending a new invoice.
  • A vendor sends an actual refund: by check, ACH/EFT transfer, or a credit back to your organization's credit card.

How do I record a vendor credit in my MonkeyPod?

To record a vendor credit, select Finance from the main navigation. Under "Income & Expenses," select Enter a Vendor Credit.

Enter the details into the Vendor Credit form as described below.

Vendor

Begin typing the vendor name to search for and select the vendor who issued the credit. Use the Create new option here if you do not see a matching vendor already in your MonkeyPod.

Credit Details

Next, fill in the details of the credit:

  • Date Received: the date you received the credit or refund.
  • Amount: the dollar amount of the credit.
  • How did you receive the credit? Choose the option that matches how the vendor handled it. The fields below this question will change depending on your selection:
    • A credit on your account balance to apply to a bill: choose this if the vendor reduced what you owe them, rather than sending you money. Select the Accounts Payable Account the credit applies to (this defaults to your standard Accounts Payable account).
    • A check or other cash-like payment: choose this if the vendor sent a physical check or other cash-like payment. Confirm the account where you'll Place the funds (this defaults to Undeposited Funds) and select the Offset Expenses account, typically the same expense account the original purchase was recorded to.
    • An ACH or EFT payment direct to your bank account: choose this if the vendor refunded you electronically. Select the account you want to Deposit to and the Offset Expenses account.
    • A credit card refund: choose this if the vendor refunded a purchase back to your organization's credit card. Select the Credit Card Account the refund landed on and the Offset Expenses account.

Tip: The Offset Expenses account tells MonkeyPod which expense the credit relates to, so your financials net out correctly. For instance, if you originally recorded a purchase under an Office Supplies expense account, you'd select that same account here for any related vendor credit. if the refund relates to a purchase from a prior fiscal year that's already closed, check with your accountant about which year the credit should affect.

Optional Information

You can also include:

  • Class: defaults to Shared Expenses, but you can assign a different class if the credit relates to a specific program or department.
  • Memo: a short note about the credit, useful context for you or anyone reviewing the transaction later.

Once everything looks correct, select Save at the bottom of the page.

How do I apply a vendor credit that was credited as an account balance?

If you recorded the credit as an account balance, it will be available to apply the next time you pay a bill from that vendor.

Go to the bill you want to pay.

If there is a vendor credit available for that vendor, you'll see an Available to apply section in the Payments Made tab.

Enter the amount to apply to this bill, and click Apply.

Frequently Asked Questions

Can I edit a vendor credit after it has been entered?

That depends. If the vendor credit has not been fully or partially applied yet, you may edit or delete it using the edit option in the action menu on the Vendor Credit page. However, if you have already applied any portion of the credit to a payment, you will not be able to edit the vendor credit.