Description
An Accounts Payable (AP) Credit is a standalone document that functions much like a negative Bill—reducing a previously recorded expense and lowering your overall AP balance. Unlike Vendor Credits, which directly offset open Bills by applying a credit to fully or partially settle the amounts owed to a Vendor, AP Credits exist independently as their own records. This distinction allows an AP Credit to adjust your financials proactively, rather than simply acting as a mechanism to pay down a specific Bill. By using AP Credits, you can more accurately manage your organization’s expenses, streamline reconciliation processes, and maintain clearer visibility into your Vendor-related liabilities.
AP Credits are created when the total Amount for a Bill is negative. AP Credits can be created in the User Interface, via Excel Upload, or via API.
AP Credits are different than Vendor Credits. Check out the Vendor Credits knowledge base article here -->
Add/Edit AP Credit
If adding an AP Credit in the UI, it would look something like the below. See that the Amount Total is negative when adding this Bill.
Note: If adding Bills with multiple lines, the sum of those lines would need to be a negative Amount for an AP Credit to be created rather than a Standard Bill.
The fields and process for creating AP Credits matches that of standard AP Bills, other than the total negative amount. Review the Bills knowledge base article for more details on how to complete required/optional fields in Bills-->
Process an AP Credit
The AP Credit is processed through the same process as a standard Bill. See a knowledge base article detailing how to create and pay Bills -->
Steps to process the AP Credit:
Approve the AP Credit under the Bills section before available to be paid
Find the Credit(s) to be processed in the
Payment Method: Manualsection and add in the Amount to Pay, Payment/Posted Dates, and optional MemoSelect the Ledger Account that will be receiving the AP Credit through this processing as the (this will be the DEBIT side of the Refund Journal Entry)
Click Pay and Confirm
Once Confirmed, you may need to
Approvethe Refund under theAP Paymentstab if you do not have the setting to Auto-Approve AP Payments ON.
Journal Entries from AP Credit Creation to Processing
Journal Entry at AP Credit Creation
DEBIT AP Account (user selected)
CREDIT Expense Account (user selected)
Journal Entry at AP Credit Processing
DEBIT Payment Account (user selected at Bill Pay step)
CREDIT AP Account (user selected at AP Credit creation step)
AP Aging Impact
When the AP Credit is created/approved, the AP Credit will impact the AP Aging report by being listed as a credit amount to the Vendor in the aging. See image below for sample AP Credit:
The Credit is then taken off of the Aging when the AP Credit is processed through the Cash Management>Pay Bills process.
Important Considerations
When an AP Credit is created, its status is 'created', and associated Journal Entries are created in 'draft' status.
An AP Credit's Journal Entries cannot be modified, you must edit the AP Credit itself and the associated Journals will be updated.
Once an AP Credit is approved, the Journal Entries will be posted.
AP Credits fall under the AP Ledger, and if attempting to close the AP task in Accounting Periods, AP Credits and their Refund Payments will need to be in Approved level of status at minimum in order to close the AP task.
The Payment Type for AP Credits will be listed in the AP Payments section as AP Refund for the Type (this allows for better ability to search and filter solely for AP Credits on the AP Payments tab).