We all know that Xero creates a user friendly method to receive money from customers and spend money for the goods and services that your company needs.
However, what if you receive a credit from a supplier and want to apply it to future bills?
In Part 1 of this blog we discussed applying credits to unpaid bills. In Part 2, let’s discuss applying credits to bills that you have already paid.
Applying Credit Notes to Bills Already Paid
From Purchases, select ‘Credit note’ from the New dropdown menu.
From this screen you will need to enter the contact, date, account, description and total credit amount. Similar to the previous credit note example, you can attach supporting documents as a PDF if needed.
Once the credit note is approved, notice that Xero gives you the option to enter a Cash Refund if one was received from the Supplier.
Do you want to apply a credit note to future bills from the same Supplier? In Xero, allocating bill credit notes is a simple process.
Xero automatically tracks Outstanding Credit Notes from your suppliers. Upon entering a new bill for a supplier, Xero will notify you if an outstanding credit note exists. Select Allocate to apply the credit note from there.
You can also Allocate direct from the Credit Note. Using the Credit Note Options tab, select ‘Allocate Credit’.
Xero will list all unpaid bills from the Supplier. You can apply a Credit Note across one or multiple bills. Once you enter the total(s) in the ‘Amount to Credit’ box, select Allocate Credit.
Now when you look at the bill from your supplier, there will be a notation at the bottom showing the Credit Note was allocated.
Keeping track of refunds and credits doesn’t have to be a monumental task. Xero makes creating and allocating credits easier than ever before. Contact us if you would like additional training on how Credit Notes in Xero can work for your business.