Supplier refunds

How to record money received from suppliers as a refund. This could be directly related to a single invoice if the refund is for faulty goods, for example or a refund for a credit note, or a refund when you've overpaid. Usually you'll want to match the refund to the payment or credit note it's paying off.

How it works

The refund will record money being paid into your bank account. How you record the refund will depend on wether you import transactions from a bank feed and whether it's being used against an existing credit note or matched to a payment.

If you use the VAT Cash Accounting Scheme, the refund is included on the next VAT return.

You can record refunds in the following ways

  • If you're importing bank transactions from a bank feed or from import file, match the incoming payment to an existing payment on account or credit note.
  • Create a refund and match to an existing payment on account.
  • Create a refund and match it to a credit note.
  • Unallocate the original invoice and supplier payment or credit note so that the invoice is outstanding and the payment becomes a payment on account, or the credit note a stand-alone credit note. You can then record a refund against the credit note or payment on account. You should only choose this option if you intend to make another payment to the supplier for the same invoice at a later date.

 

Match a refund from a bank feed

If you use bank feeds, you can only match the refund in your bank feed to the credit note it's paying.

  • Create the credit note first.

  • From your bank feed, select Match and then select or search for the relevant credit note.

Create a refund and match to a payment

If you’re refunding a payment on account, you must use this option.

  1. Go to Banking, then open the relevant bank account.
  2. Select New then Sale / Receipt.
  1. Select the Supplier Refund tab, then complete the following information:
Supplier *  Enter either the company name or reference. As you start to type the list of suppliers appears, choose the relevant supplier.
Paid into Bank Account * Check the correct bank account appears. If you need to change this, choose the correct account from the drop-down list.
Method * Click the required payment method.
Date Refunded * Enter the date of the refund.
Reference (optional) If required, enter a reference for this receipt.
Amount Refunded * Enter the total amount of the refund.
Balance Owed The total outstanding balance is displayed here.
Bank Balance The current bank balance for the selected bank account is displayed here.
Tick If Cheque If the supplier gave you a cheque for the refund, select this check box.

Note: This option is only available if the account you chose is a cash in hand account.

* These details are compulsory.

By default, only outstanding credit notes and payments on account are shown. To see all credit notes and payments on account, choose All from the Display drop-down list.

  1. Select the check box next to the credit note or payment on account that the supplier has refunded.

You can’t refund part of a payment on account or credit note. If you need to refund part of a transaction, you must first ensure you allocate the necessary amount of the payment on account or credit note to the relevant invoice, then refund the remaining outstanding value.

  1. Click Save or, to add another payment, click the Save arrow then Add Another and repeat from step 2.

You’ve now recorded the refund and the bank and supplier balances are adjusted accordingly.

Create a refund from a credit note

If the supplier has refunded part of the credit note, for example, because they’ve used part of it to pay an invoice, you need to allocate the relevant amount of the credit against the invoice before you record the refund for the outstanding balance.

  1. Go to Purchases then click Purchase Credit Notes.
  2. Click the relevant credit note.
  3. Click Record Refund, then check or enter the following information:
Amount Received * This is the total value of the credit note and you can’t amend this.
Paid into Bank Account * Choose the bank account used for the refund.
Method * Click the required payment method.
Date Refunded * Enter the date of the refund.
Reference (optional) If required, enter a reference.
Tick If Cheque If the supplier gave you a cheque for the refund, select this check box.
Note: This option is only available if the account you chose is a cash in hand account.

* These details are compulsory.

  1. Click Save.

You’ve successfully refunded the credit note which now shows as paid.

Overpaying a supplier

If you’ve overpaid your supplier, you must first complete the steps above to allocate the refund to your payment or credit note. Doing this means they won’t show as outstanding. Next, to show the amount you were overpaid, record a new supplier payment on account. Use this to match to future transactions.

To record a supplier payment on account

  1. Go to Banking, then click the required bank account.
  2. Click New Entry, then click Purchase / Payment.
  3. Within the Supplier Payment tab, complete the following information:
Supplier *  Enter either the company name or reference. As you start to type the list of suppliers appears, choose the supplier you’ve paid.
Paid from Bank Account * Check the correct bank account appears. If you need to change this, choose the correct account from the drop-down list.
Date Paid * Enter the date you made the payment.
Amount Paid * Enter the total amount of the payment on account.
Reference (optional) If required, enter a reference for the payment.

* These details are compulsory.

  1. If you’re paying an invoice with part of this payment on account, select the relevant invoice.
  2. Do one of the following:
  • To save the payment on account, click Save, then click Yes.
  • To save and add another payment, click the Save arrow, then click Add Another then repeat from step 3.