---
title: "Record a vendor credit or supplier refund in QuickBooks | Datamolino"
url: https://www.datamolino.com/learn/quickbooks-online-vendor-credit/
description: "How to enter a vendor credit (supplier credit) in QuickBooks Online, apply it to a bill, record the refund deposit and post a credit card credit."
published: 2026-09-29
updated: 2026-09-29
source: "Datamolino website (www.datamolino.com), Markdown copy of the page at the URL above. Prices and product details can change; check the page before relying on them."
---

# Record a vendor credit or supplier refund in QuickBooks

Choose the transaction that matches how you recorded the original purchase: a vendor credit for bills (called a supplier credit in UK versions), a bank deposit for expenses and cheques, or a credit card credit for card refunds. For a refund on a bill you have already paid, the vendor credit and the bank deposit are linked in Pay bills.

Published 29 September 2026 · by [Jan Korecky](https://www.linkedin.com/in/korecky/) · Updated 29 September 2026 · 4 min read

## Can I enter a negative bill in QuickBooks Online instead of a vendor credit?

Intuit's help steps use a vendor credit, not a negative bill. Enter a vendor credit (supplier credit in UK versions), a bank deposit or a credit card credit, depending on how the original purchase was recorded and how the money came back.

## Which transaction should you use?

A supplier credit note reduces what you owe a supplier, or entitles you to money back; [what a credit note is](https://www.datamolino.com/learn/what-is-a-credit-note/) explains the document. The steps below follow [Intuit's help article](https://quickbooks.intuit.com/learn-support/en-us/help-article/vendor-credits/enter-refund-vendor/L2y1KARni_US_en_US), which is the US edition and says vendor. UK versions use supplier wording, for example Supplier credit, so look for that where the steps say vendor credit.

| Situation | Enter this |
| --- | --- |
| You entered the purchase as a bill, and the credit will reduce a bill | Vendor credit, then Pay bills |
| You entered the purchase as an expense or cheque, and money came back | Bank deposit |
| You entered a bill, paid it, and the supplier refunded you | Vendor credit, bank deposit, then Pay bills to link them |
| The supplier refunded your credit card | Credit card credit |

Intuit suggests asking your accountant if you are unsure which route fits your books.

## Create the vendor credit for a bill

Use this when you track purchases as bills.

1. Select **Create**, then **Vendor credit**.
2. Pick the **Vendor**.
3. Enter the **Category** or **Item details** so they match the original bill. [Category details vs item details](https://www.datamolino.com/learn/quickbooks-online-category-details-vs-item-details/) explains the choice.
4. Select **Save and close**.

If you pick an inventory item, QuickBooks puts it back into inventory. When the goods were defective or you do not want them added back, Intuit says to make an inventory adjustment.

Example (illustrative): a supplier bill for £1,200 included £200 of goods you returned. The credit note is for £200. You enter a vendor credit for £200 against the same expense category as the bill.

## Apply the credit to a bill

1. Select **Create**, then **Pay bills**.
2. Select the bill you want to pay.
3. QuickBooks automatically applies the available credit to it.
4. Check the **Credit Applied** amount.
5. Select **Save and close**.

In the example, the £1,200 bill now needs £1,000 paid.

## The supplier already refunded a paid bill

Sometimes you have paid the bill and the supplier sends the money back. This needs three steps.

1. Create the vendor credit as above, matching the original bill.
2. Create a **Bank deposit**. Under **Add funds to this deposit**, set **Received From** to the vendor, and set **Account** to **Accounts Payable (A/P)**. Enter the payment method and the refund amount. Intuit stresses that you must choose Accounts Payable, because that links the deposit to the vendor credit.
3. Select **Create**, then **Pay bills**, and choose the bank deposit you just created. Check that **Credit Applied** equals the deposit and that **Total payment** is zero.

If you recorded the original purchase as an expense or cheque rather than a bill, skip the vendor credit. Create a **Bank deposit**, set **Received From** to the vendor, and choose the same **Category/Account** you used for the original expense. Add the customer or project only if the refund relates to one.

## Record a refund to a credit card

When the supplier refunds a purchase to your card:

1. Select **Create**, then **Credit card credit**.
2. Choose the vendor in **Payee**.
3. Choose the card in the **Bank/Credit account** field.
4. Enter the date, amount, tax and category. The category must match the original expense account.
5. Select **Save and close**.

## Mistakes to check for

- **Using the wrong account on the deposit.** For a paid bill, the deposit must go to Accounts Payable, not straight to a category. Otherwise the vendor credit stays open.
- **Mismatched category.** The credit should use the category or item from the original bill, so the reduction lands where the cost was first recorded.
- **Skipping the tax field.** The credit card credit form asks for tax as well as amount. Enter what the supplier credit note shows.

If you capture supplier documents with Datamolino, it detects a supplier credit note and pre-selects the Supplier Credit export type, so the credit reaches QuickBooks Online as a vendor credit with the original attached. A refund to a card can go as a Credit Card Credit instead. You then apply the credit in Pay bills as described above; the [QuickBooks integration](https://www.datamolino.com/quickbooks-integration/) page lists the export options.

## Where do I apply a vendor credit to a bill?

Use Create, then Pay bills, and select the bill. QuickBooks applies the available credit automatically. Check the Credit Applied amount before you save.