Supplier Credits

Using up what a supplier owes you after a return, a price correction or an unused deposit — a refund, a credit against their next order or an unpaid bill, or a write-off — and what each does to your books.

6 min read · Updated 25 Oct 2026

On this page

A supplier credit is money a supplier owes you. Completing a supplier return issues one, numbered DM-000001 (your debit memo). So does posting a negative price adjustment, when a supplier overbilled you, and so does a deposit you paid ahead that the order never came to owe, because it was cancelled or less arrived. It stays on the supplier until you use it up: they refund you, you apply it to another of their orders or to a bill you owe them, or you write it off.

Supplier credits need the Inventory Pro add-on. Settling them takes a PO manager who can also see cost prices (Owner and Manager by default, or a custom role with Create / Submit / Cancel Purchase Orders and See Cost Prices).

Finding credits

Go to Purchasing → Supplier Credits. The list opens on the credits that still have a balance. Switch the filter to see partly used or closed ones, or search by memo number.

Each credit shows:

Figure What it means
Amount What the return was worth (plus freight charged to the supplier), the price correction, or the deposit not used
Applied to orders & bills Taken off purchase orders that have since been finalised, or off supplier bills
Refunded Paid back to you
Written off Given up on
Waiting on an open PO Set against an order that isn't finished yet. It isn't available for anything else until that order is received or closed.
Available What you can still refund, apply or write off

A credit is Open until any of it is used, Partially used while some is left, and Closed once the whole amount is gone.

The same panel appears on the return that issued the credit, so you can settle it from either page. Print debit memo prints it for the supplier.

Refund

The supplier paid you back. Choose Refund, enter the amount, how it came in (cash, bank transfer, cheque, GCash or Maya) and a reference such as the cheque or transaction number.

A refund is recorded outside the register. If the supplier hands cash to a cashier and it goes into a till, also record it there as a Cash In with the source Transfer from Safe / Bank. That keeps the drawer count right without counting the money twice.

Apply to another purchase order

Most suppliers settle a credit against the next delivery. Choose Apply to PO and pick one of the supplier's open orders (submitted or partly received). Only orders from the same supplier are offered.

The credit waits on that order. When the order is fully received or closed short, its payment is the received value less the credit; on an order bought on credit, it is the bill that comes out smaller. If the order ends up owing less than the credit, the rest comes back to the credit's balance automatically.

You can also start from the purchase order: an open order whose supplier has credits shows Apply supplier credit in its Supplier credits card. The card lists what is waiting on the order and, once it is finalised, the payment after credits. Close Short shows the payable net of those credits before you confirm.

Changed your mind? Take back on a waiting application returns the amount to the credit, and the order will be paid in full. Cancelling the order does the same.

Apply to a supplier bill

If you bought from the supplier on credit and still owe them on a bill, take the credit off that bill: open the bill and click Apply credit, then pick the credit and the amount. It is settled at once, and the bill shows it under Credits. Only that supplier's credits with something available are offered, and the amount can't be more than the bill still owes.

A return or a negative price adjustment on an order whose bill is still unpaid doesn't wait for you: it comes off that bill automatically, as far as the bill still owes, and only the rest stays available. See Supplier bills and payables.

Write off

If the supplier won't pay, choose Write off, enter the amount and say why. This can't be undone. The amount shows on the Profit & Loss as its own line, Supplier credits written off, below operating expenses.

Large write-offs need the Owner

A write-off of more than ₱1,000 by anyone other than the Owner goes to the Owner for approval first:

  • The credit shows the write-off as Awaiting approval. The amount is on hold: it can't be refunded or applied to another order meanwhile, but nothing is written off yet and nothing reaches your books.
  • It appears in Approvals as a Supplier Credit Write-off, with the amount, the credit and the reason.
  • Approve writes it off on the day of approval. Reject (or Request changes) puts the amount back on the credit, free to use; enter a new write-off if a different amount is right.
  • Nobody approves their own write-off, and one entered by a manager needs the Owner. The Owner's own write-offs go through straight away.

Write-offs of ₱1,000 or less still go through at once. The Owner can change the limit under Settings → Inventory Settings → Purchasing; set it to ₱0 to have every write-off approved. The phone and desktop apps list these approvals under All in their approval queue.

What lands in your books

Action Entry Dated
Refund in cash, GCash or Maya DR Cash on Hand / CR Accounts Payable When you record it
Refund by cheque or bank transfer DR Cash in Bank / CR Accounts Payable When you record it
Write-off DR Operating Expenses / CR Accounts Payable When you record it, or when it is approved if it needed approval
Apply to a PO No entry of its own: the order's payment or bill is smaller When the order is finalised
Apply to a bill No entry of its own: the bill and the credit both sit in Accounts Payable

The return, price adjustment or deposit put a debit on Accounts Payable (the supplier owed you). Each of these brings it back, so once a credit is closed your payables to that supplier net to zero.

Entries are never backdated. A refund recorded today lands in today's books, even if the return was last month.

Where to go next