Easy Tech TutsHow to Apply Vendor Credit in QuickBooks Online Easily 2026
By Impran M N
When a vendor issues a credit for a return, overpayment, or discount, applying it correctly keeps your accounts payable accurate. This guide shows how to record a Vendor Credit in QuickBooks Online and apply it to an outstanding bill.
01Create the vendor credit
Click + New, select Vendor Credit, and choose the supplier issuing the credit.
02Enter credit details
Set the credit date, select the original expense account, and enter the credit amount.
03Save the credit
Add a memo for your audit trail, then click Save and Close.
04Open Pay Bills
Click + New again and select Pay Bills, then check the outstanding bill you want to pay.
05Apply the credit
In the Credits section, check the box next to your recorded credit to reduce your net payment, then save and close.
Frequently asked questions
Do I need to create a separate transaction for a vendor credit?
Yes, you first record it as a Vendor Credit, then apply it against a bill through the Pay Bills screen.
Can I apply only part of a vendor credit?
Yes, you can apply a portion of the credit now and save the remaining balance to apply against a future bill.
How do I confirm my vendor's balance updated correctly?
Run the Vendor Balance Detail report to cross-verify the adjusted supplier account.
What expense account should the credit use?
Use the same expense category that was used for the original purchase to keep your reporting accurate.
Watch the full walkthrough
The same steps, demonstrated on screen from start to finish.
