How to Process Vendor Refunds in Sage BusinessWorks

Have you ever received a vendor refund and weren’t sure how to process it. We will show you how to record that vendor’s refund without leaving any open credits or open invoices related to the refund.

Steps on how to process vendor refunds in Sage BusinessWorks:

Step 1: Enter a credit memo

• Accounts Payable > Invoices > Credit Memo.

• Select Vendor.

• Apply to Open Credits.

Note: If the credit memo is being posted to an invoice and a purchase order is associated with the invoice. You can enter the purchase order at this time. If you wish you could also add a credit reference as well.

• Enter Data and the Amount.
• Enter the distribution account number.

When you’re crediting an invoice, the account number is usually the account that was debited when the original invoice was posted. When posting to open credits, and the vendor has a default posting account assigned, that account will automatically populate the field.

• Post the credit memo.

The credit memo will debit accounts payable and credit the general ledger account you specified.

Step 2: Enter a Debit Memo

• Accounts Payable > Invoices > Debit Memo.

• Select Vendor.
• Apply to open credits.

Note: Enter a purchase order number if applicable.

• Add an optional Debit Reference.

• Enter the Date and Amount.
• In the account number field, you want to enter the cash General Ledger account into which the refund will be deposited.

• You can then post the debit memo.

The debit memo will credit the accounts payable and debit your cash account. The net effect on the general ledger is an increase in the cash account and a decrease in the general ledger account that you specified with the credit memo.

Step 3: Enter a Bank Transaction (Deposit)

Note: The bank transaction needs to be entered so there will be a reconciling item in your bank reconciliation. If you do not use the Sage BusinessWorks bank reconciliation feature you can skip this step.

• Cash Management > Transaction > Enter Bank Transactions.

• Transaction Type > Deposit.

• Select the same cash account that was used for the debit memo.

• Enter the dollar amount.

• A description can be entered.

• Select Date.
• Most importantly, uncheck the “Post to G/L” checkbox since the debit memo has already posted to your cash account in the General Ledger.
• Select Post.

• Select “Yes” to the message that pops up.

The vendor refund is now complete.

Step 4: See how Transactions affect the vendor’s account. 

• Accounts Payable > Reports > Detail Report.

• Select the Vendor for whom the refund was processed (uncheck the include all vendor checkbox).

• Select Preview.

• On the preview of the detailed report, you can see that the credit and debit memos canceled each other out.

Step 5: See how the General Ledger was affected is your journal report.

• General Ledger > Reports > Journal Report.

• Include what entries you can select your specific posting date range.

• For the journal you can select, to see only the accounts payable.

• Select Preview.

• You can see the posted credit memo you did; it credited the account that you specified and debited the accounts payable. Then when we posted the debit memo it debited the cash accounts and credited your accounts payable. The two accounts payable entries have washed each other out.

If you have questions or need assistance with your Sage BusinessWorks software at any time, please contact our BusinessWorks support team at 260.423.2414.

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