Dealing with a supplier credit note

Hello,

I’m new to accounting systems.

I have received a credit note from a supplier. Since then we’ve received two more invoices which are to be paid with the credit note. The credit note is for a larger amount than the sum of the invoices.

e.g. Credit note $5000
Invoice 1 $2000
Invoice 2 $1000

How can I correctly enter into ERPNext that Invoice 1 and 2 are paid, but from the credit note, not from a bank account?

I’ve entered the Credit note as a Purchase Invoice with the
Is Return check marked. Is this correct?

Have I fundamentally misunderstood something here?

Can someone walk me through the process of receiving a credit note and offsetting that against subsequent invoices?

You could add the credit note via a Journal Entry. Then reconcile the journal entry against both of the invoices. Marking the two invoices as paid, while the remaining amount remains as credit in the supplier account.

1 Like

Hi — did anyone ever land on the “best practice” for this in ERPNext (credit note vs journal entry vs something else)?

We’re dealing with a similar situation, except our “credit note” is a promo rebate (not a physical return). Our current plan is:

  • Create a Purchase Invoice Return / Credit Note against the original Purchase Invoice

  • Keep Update Stock unchecked so it doesn’t touch inventory

  • Add a line that represents the rebate amount (promo units × rebate rate), and map it to a contra-COGS account so it reduces COGS for that specific SKU / item group

  • If the original PI isn’t paid yet, this reduces the amount owed; if it is paid, it becomes supplier credit that can be applied to the next invoices

Does anyone see issues with this approach vs using a Journal Entry + reconciliation like suggested above?

@fishter

Please knock off Invoices, credit notes with payments Entry or Jvs by working with Payment Reconciliation Tool.