About purchase credit note processing

You can create a purchase credit note to account for a supplier's credit note, or you can use it as a clearing document to correct errors on an existing invoice or credit adjustment.
A purchase credit note may be created as a request for a supplier refund (for example, for damaged items or an overpaid invoice), or it can be directly applied against invoices or credit adjustments.

You can enter a purchase credit note by using the Purchase invoices (AP301000) window.
The summary of a purchase credit note includes information about the supplier, the supplier location, and the currency used for the transaction.

A purchase credit note should contain at least one line. The adjustment can have a summary line or any number of detail lines.

We recommend that when you enter a document, you include all the details available in the original supplier document.

When it is first saved, a purchase credit note is automatically assigned a unique identifier that lets you track the purchase credit note through the system. The system generates this identifier according to the number series assigned to debit adjustments in the Supplier ledger preferences (AP101000) window.

To facilitate auditing and user reference, you can attach to each purchase credit note an electronic version or a scanned image of the original supplier document or internal document. Also, you can attach a related document to each line of the document.

Generally, a purchase credit note is not linked to an invoice or other document that it is related to. You may include a reference to the original document (invoice or prepayment) in the description of the purchase credit note and a reference to the related supplier document in the Supplier reference field. If Raise an error on duplicate supplier reference number option is not selected in the Supplier ledger preferences (AP101000) window, then you can use the same reference number (of the original supplier document) on both the invoice and the related purchase credit note; this will make it easier to find both the invoice and the adjustment.

Each purchase credit note has one of the following statuses, which tells you its stage in processing:

  • On hold:
    Generally, this status is used for a draft.
    This is the default status for new documents if the Hold documents on entry check box is selected in the Supplier ledger preferences (AP101000) window.
    A purchase credit note with the On hold status can be edited.
  • Balanced:
    After editing is completed, a Balanced adjustment may be saved only if it remains balanced.
    If the Validate document totals on entry option is selected in the Supplier ledger preferences (AP101000) window, you can take a purchase credit note off hold only if you correctly type the document control total.
  • Open:

    This status reflects that the document has been released and may be applied against invoices and credit adjustments.

    The status remains Open until the unapplied balance becomes zero.
  • Closed:
    This status means that the unapplied balance of the document is zero.

You can release purchase credit notes in bulk by using the Release supplier documents (AP501000) window or individually by using the Purchase invoices (AP301000) window.

On release of a purchase credit note, a batch of the following transactions is generated for a one-line adjustment.

Account Debit Credit
Customer ledger account Amount Amount
Expense account Amount Amount

A cash discount cannot be applied to a purchase credit note.

A batch created upon release of the purchase credit note is numbered in accordance with the number series assigned to the batches originating in supplier ledger. The batch number is specified on the Financial details tab of the Customer payments (AR302000) window.

Released purchase credit notes may be matched against any invoices and credit adjustments of the same supplier or may be used to offset supplier refunds.

Released purchase credit notes appear in the Customer payments (AR302000) window and can be applied against credit adjustments and invoices.

When you create a supplier ledger payment and load the documents to be paid, the purchase credit notes appear at the top of the list so that you do not forget to apply them.

A supplier refund serves as a payment for a purchase credit note. When you receive a refund from a supplier and enter it into the system, create a purchase credit note in the same amount of money for the same supplier and pay for this purchase credit note by using the supplier refund.

Once the supplier refund is applied against the purchase credit note and released, both documents become closed.

Releasing a supplier refund creates a batch of the following accounting transactions.

Account Debit Credit
Cash account Amount 0.0
Supplier ledger account 0.0 Amount

If a refund is paid in a foreign currency, the realised gain or loss account may also be updated by the amount resulting from the differences in exchange rates for the original purchase credit note and the supplier refund.

Relationship table links