There may be occasions where a vendor issues a credit amount for a PO, due to an undershipment, a later volume discount or items being returned. There are four basic ways to handle situations where something subtracts from the order total:

1. Final quantity variances that are noted before using Entering/Reconciling Vendor Final Invoices are simply entered in the Expediting screen's "Shipped" quantity field. This is not as much a credit as a notation of what was on the final vendor invoice.
2. Adjusting the cost of each item to reflect a percentage discount from the original price. This is also typically done prior to reconciling a final vendor invoice.
3. Creating a clone of an item with either a negative quantity (returns) or a negative unit amount (quantity discount). This is best for documenting post-processing changes caused by changes to a single item. 
4. Creating a special line item with the entire credit as a lump sum. This should separate any tax or freight amounts from the FF&E to avoid confusion. 

It may make sense (especially for creating clear documentation) to use a combination of adjustment items. For instance, if you returned 10 items but there was a 10% restocking fee, you could either clone the original item with a -10 quantity, which subtracts the original cost and add an item called "Restocking fee" with either a lump sum or a quantity of 10 times 10% of the original cost. 

Options

Before treating this as a true "credit" item where you are creating a negative line amount on an order, here are situations that affect that type of adjustment:

• Is this a credit for an item where you have already entered and reconciled the vendor's "final" invoice? It will be easiest to treat it as a separate line. 
• Is this a credit for an undershipment that you have already processed as a variance on a check request? You may have already "pre-processed" the adjustment, so be careful not to "double up" on the amount. Also, a change of quantity credit is best documented by a literal change in the "shipped" quantity—this is always preferable to one that simply shows a lump sum difference, but may not be possible if the vendor's (incorrect) invoice was already processed. 
• Is this a volume credit given "after the fact" for an order that was paid with a 100% deposit? This is a good reason to add a special line item. The check request it generates will show a negative amount to document the difference.
• Is the credit expressed as a separate item on the vendor invoice (not, when they invoice you, as an adjusted unit cost that includes the discount)? Having your version of the order match what the vendor is invoicing is always best. 

If none of these apply (especially early in the order's processing cycle), you may only need to adjust the original quantity or cost amount (if the order has not been issued) or enter the actual quantity shipped (for under-shipments). These are simpler solutions that yield the same net amount on the order and do not complicate any related tax amounts. Again, making your order match what the vendor will invoice makes reconcilation easier.

If a special line item for a discount is needed, use the smaller Add (item) button to add a new item to the order and select the "Lump sum credit" option. This allows you to pre-fill the vendor document information if the rest of the order has already been processed.

In the case of a verbal volume credit (not a documented lump sum), if you have not issued a check request (or for percent-based purchasing management fees, your own invoice), you still have the option of simply adjusting the cost on the order to match the equivalent unit cost that produces the credit. Of course, large multi-item orders may still be easier to adjust with a single credit—but make sure the resulting credit item is not "billed" to the client on a for-profit job. You do this for these by setting the price to zero (-100% markup).

If you have issued a check request or a purchasing management invoice, you also have the relatively simple option of voiding the check request or invoice, adjusting the unit cost and issuing a new check request or invoice for the same items. If you don't, a new check request can be issued with a negative amount (i.e., the credit). See Reversing Status Milestones for information about "backing up" in the order management process.

Partial Credits

If none of these methods work for your situation, there are three approaches, all  involving the creation of a negative item on the order. Since this new item has not been processed, you can process it on a check request (as an acknowledgement of a refund from the vendor) or purchasing fee invoice (credit to your client):

1. If the credit is for an under-shipment, you can create the item with a negative quantity at the original price to offset the extra quantity that was processed earlier.
2. If the credit translates to a unit cost refund, you can create an item with a negative cost representing the unit-cost refund and use the original quantity. Example: If the original item was for 100 units @ $1.00/unit and you received a 10% discount, you can create the new credit item as an item of 100 units @ -.10/unit.
3. If the credit is a lump sum amount, create an item with a quantity of "1" and a negative cost representing the lump sum credit.

Important: If the lump sum appears in the vendor invoice summary and includes a tax amount, you should create the item so that the "FF&E" amount does not include this tax. When you process the credit as part of a "final invoice" from the vendor, you will want to enter the tax portion as a negative amount in the "Tax" line of the final invoice input area. 

Note that if the credit is just one line among many being processed, the tax amount you enter would include the effect of the credit. On the other hand, if the credit appears as a line item among "real" items on the vendor's final invoice, it is likely that the tax credit is included in the total net tax amount shown by the vendor in the summary. In that case, enter the entire credit as the negative amount on the credit item. This should be apparent when you enter the numbers as part of the "Enter/Reconcile Vendor Final Invoice" processing task and select all items on the final invoice.

100% Credits

Partial credits can be processed with other order items as long as you enter the net amount for the vendor invoice. However, a special situation occurs if the vendor credit is a full refund for the order (this might occur if the order was canceled but a deposit was already paid). The following are typically true in this situation:

• The order has been issued.
• The vendor's required deposit was entered.
• A deposit check request may have been issued.

Of couse, one option for this is to close out the order by voiding it. The order will drop out of any reports, unless you enable the "Include voided orders?" option on some reports that have it. If you do, you will have to remember that the report may include the amounts for these voided orders. 

Another approach, especially if you prefer to leave an audit trail of what happened to the order, is to enter the refund or credit as a negative amount on a new item. If this is done, the order itself has a net zero balance, which will not affect your reports, but also displays a "record" of the refund. Note, though, that an order with a zero balance will be "ineligible" for certain types of processing, especially the Enter/Reconcile Vendor Final Invoices function. This is normally not a problem, because there will be no further order activity after you create the negative item, following this procedure:

1. Optional, for projects with markups (billing type 1): Edit the original order item(s) and change the markup to "0". This is not required, but since you are not selling this item, it makes sense to remove any sell price to avoid any future confusion in other reports.
2. Examine the order and verify that the "Deposit Applied" amount is zero. This should be the case on an order that was canceled with a 100% refund, since we assume that no shipping occurred and no final invoicing was received. If this is true, go to step 4.
3. If a deposit has been applied, it means that a vendor invoice has been already processed. You can reset the vendor invoice entries with Update Order Status on the Expediting screen. Otherwise, contact technical support for help.
4. Edit the order and remove all entries for deposit amounts, including the "Deposit received" amount. The system will warn you if a deposit check request has been issued, but since we are reversing this out of the system, this will be okay (you also have the option of first voiding the deposit request and noting why in the "Notes" field on the Check Requests screen). Deleting the required deposit amounts removes these from any deposit status reports and represents your recording the cancellation and refund of the deposit. Recommended: Add a note to the order's "Status Notes" field to document the reason for the change.
5. Add the credit item to offset the original item with either a quantity of 1 using the negative full FF&E amount or the original quantity X the negative unit cost.