Vendor credits are a way for businesses to manage and record returns or adjustments related to purchases from suppliers. They help maintain accurate accounts payable and inventory records. Here’s a closer look at what vendor credits are, when to use them, and how to process them in NetSuite.
What is a Vendor Credit?
A vendor credit is an acknowledgment from a supplier that a business has returned goods or is entitled to a reduction in the amount owed. This credit can be used to offset future purchases or to adjust accounts payable.
Common Reasons for Vendor Credits
- Returned Items: When goods received from a vendor are defective, damaged, or not as ordered, they may be returned, generating a vendor credit.
- Overbilling: If a vendor charges more than agreed upon or invoices incorrectly, a credit can be issued to correct the discrepancy.
- Discounts or Rebates: Vendors may offer credits for early payment, bulk purchases, or as part of a promotional agreement.
- Adjustments: Any adjustments due to pricing errors or contractual agreements can result in a vendor credit.