Credit Entries (Vendor Credits)

What is this page about: This page explains how vendor credits work in Light: what a credit entry is, the states it moves through, how to create one, how to post it, and how to apply it against an open bill. It's written for anyone who works with accounts payable, whether you're new to the workflow or you're an accountant who wants the exact field names, states, and rules.

# On this page

• What a credit entry is
• Credit entry states
• Creating a credit entry
• Posting a credit entry
• Applying a credit to a bill
• Removing an applied credit
• Recording a vendor refund
• Archiving a credit entry
• Related articles

# What a credit entry is

A credit entry (also called a vendor credit or credit note) records money a vendor owes you back, for returned goods, a billing correction, or a refund. Once posted, you apply it against one or more open bills from the same vendor, so the bill balance goes down without a separate payment.

In Light, go to Spend management → Credit entries.

# Credit Entry States

A typical credit moves Posted → Partially cleared → Cleared as you apply it to bills. If your workspace requires approval, it moves Draft → Pending approval → Posted first, approval moves it straight to Posted, with no separate step to act on in between.

You may also see an Approved state briefly or in some filters. It's a real underlying status, but it's transient, the system passes through it and lands on Posted in the same step, so it's not a state you'll ever act on directly.

# Creating a Credit Entry

1. In Light, open Spend management → Credit entries.

2. Click + Create credit entry. This immediately creates the entry in Draft and opens it, there's no header to fill in first and no separate save step.

3. Fill in the header. The fields are:

   • Vendor
   • Entity
   • Effective date
   • Currency
   • Credit amount
   • Number
   • Description (optional)

4. Add one or more line items. Each line needs a GL account and an amount. Description and tax code are optional, and a cost center field appears only if your company uses the NetSuite integration.

Header and line fields auto-save as you edit them, so there's nothing further to click to save your changes.

# Converting a credit note that arrived as a bill

Vendors' credit notes arrive the same way bills do: emailed to the address shown after Send invoices to in the Inbox popover, or uploaded from the ... menu on the Bills page. Light reads each document, and when it recognizes a credit note, it turns it into a credit entry for you.

The credit entry appears in Spend management > Credit entries as a Draft. Light copies the vendor, entity, currency, number, date, line items and the original document from what it read. The document shows on the Bills Inbox tab while Light reads it, then moves to Credit entries.

Light fills in Vendor when the vendor on the document matches one of your active vendors by name, VAT ID or bank details. When none match, the draft's Vendor field is empty. Open the draft from the Credit entries list, choose the vendor, check the amounts and lines against the document, then post it as usual.

Good to know: To find credit entries waiting for you, filter the Credit entries list by Draft status.

# Converting a bill to a credit entry yourself

A credit note stays on the Bills Inbox tab as a Draft bill when Light reads it as an invoice, when Light flags it as a possible duplicate, or when the automatic conversion fails, for example because the vendor is inactive or already has a credit entry with that number. To turn it into a credit entry:

1. In Spend management > Bills, open the document on the Inbox tab while it's in Draft.
2. Make sure Vendor is set. Without it, the action is disabled with the tooltip "Please select a vendor."
3. From the actions menu, click Convert to credit entry and confirm.

A "Converted to credit entry" toast confirms it ("Credit entry added to vendor"). The bill is removed, and Light opens the new credit entry in Draft for the same vendor and amount.

# Posting a Credit Entry

Open the credit and click Post in the header.

If your company has a published Credit entry approval workflow with approvers (Settings → Workflows), the button reads Submit for approval instead, with the toast "Credit entry submitted for approval". Otherwise Post posts it straight away, with the toast "Credit entry posted". The credit sits in Pending approval until a reviewer approves it, then it moves to Posted automatically.

If an approver rejects the credit instead, it now returns to Draft so you can edit and resubmit it, rather than being archived automatically. The activity timeline shows this as a distinct "Declined" entry, separate from a manual reset to Draft, so you can see who rejected it and when.

To pull back a credit that's in Pending approval or Approved, open it, click the actions menu (⋮), choose Reset to draft and click Confirm. Approvals given so far are discarded and the credit returns to Draft, where you can edit it, submit it for approval again, or archive it. Company Admins, Controllers, AP Clerks and AP Preparation users can reset a credit.

A credit only becomes available to apply against bills once it's Posted.

# Applying a Credit to a Bill

1. Open a Posted credit entry.
2. Find the Apply credit to bills table. It lists open bills for the same vendor and entity, in the same currency, along with each bill's Original amount.
3. Tick the bill you want to apply the credit to. This opens a dialog where you enter the application amount.
4. Confirm.

The credit's remaining balance (the credit amount minus what's already applied) updates as you go. You can apply one credit across several bills, one at a time. Once the full amount is applied, the credit's state changes to Cleared.

Light checks the amounts as you apply:

• "Remaining credit is not zero." shows while part of the credit is still unused.
• "Applied credit exceeds credit entry amount" appears on Remaining credit if you apply more than the credit has left.
• "Applied credit exceeds bill amount" appears on Adjusted bill amount if you apply more than the bill is worth.
• "Credit total exceeds bill total" appears on the bill's To be paid if its credits add up to more than the bill.

# Paying a bill after a credit

The bill's To be paid drops by the credit applied, and that reduced amount is what gets paid. After the bill is approved, go to Spend management > Bills, Scheduled tab, select it in Ready for release and click Submit for approval (N) to send the payment for approval. A bill fully covered by credit pays nothing. See Scheduling and Releasing Payments.

# Removing an Applied Credit

Open the credit's detail view and untick the checkbox next to the bill you want to remove. This unwinds that application and adds the amount back to the credit's remaining balance.

# Recording a Vendor Refund

If a vendor pays you back in cash instead of you applying the credit to a bill, click Enter payment from the credit's detail header. This is available while the credit is Posted or Partially cleared. Choose the payment date and the account the refund is coming from, which can be a bank account or a ledger account, then enter the amount.

# Archiving a Credit Entry

Click Archive from the credit's detail header. This is only available for credits in Draft or Posted, once any amount has been applied to a bill, the credit moves to Partially cleared and the Archive option no longer appears there. Applying a credit removes the Archive option automatically, so a credit with active bill applications is never left needing one.

# Related Articles

• Entering bills
• Scheduling and Releasing Payments

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