Overview

ℹ️ Feature Availability: The functionality described in this article is being released in stages. If you cannot see a feature described below, it may not yet have been released to your organisation.
 When enabled, all newly created Supplier Credit Notes use this process. Credit notes created through the previous process remain available and must continue to be managed through the existing workflow until their balances have been fully dealt with.

Foreign-currency Supplier Credit Notes are not currently supported.

A Supplier Credit Note records money that a supplier owes back to your firm. For example, the supplier may have:

• overcharged the firm;

• refunded returned goods or cancelled services;

• reduced the cost of a matter-related disbursement; or

• agreed to refund part of a previous purchase.

New Supplier Credit Notes appear alongside purchases on the Purchases screen and are displayed as negative amounts because they reduce the amount owed to the supplier.

Matter-related credits: When a Supplier Credit Note is allocated to a matter, Efimis creates a negative incurred purchase disbursement on that matter. This reduces the matter’s unbilled incurred disbursement balance and can be included in client billing where appropriate.
This is one of the main differences from the previous Supplier Credit Note process, which did not allow a credit to be allocated directly to a matter.

A Supplier Credit Note can be:

• allocated to a General Ledger account;

• allocated to one or more matters;

• used in full or in part against purchases from the same supplier;

• included in Office Payment or Batch Pay;

• offset against a purchase without moving any cash; or

• refunded directly into the firm’s bank account.

The Supplier Credit Note does not need to be linked to the original purchase or disbursement.

Create a Supplier Credit Note

You can create a Supplier Credit Note from either the Purchases screen or the supplier record.

You need Create Purchase permission and access to the Purchase Unrestricted permission set. There is no separate Supplier Credit Note permission.

Create from Purchases

1. Navigate to Purchases.

2. Select Add Supplier Credit Note.

3. Complete the credit note details.

4. Add the required account or matter allocations.

5. Check the amounts and tax treatment.

6. Select Post or Post & new.

Create from the supplier record

1. Open the relevant supplier.

2. Select Create new → Supplier Credit Note.

3. Confirm the supplier, which is populated automatically.

4. Complete the remaining details and allocations.

5. Select Post or Post & new.

Supplier Credit Notes cannot be saved as drafts. They must be posted when they are created.

Complete the credit note details

There is no separate Due date field. Efimis uses the Original date as the due date.

Enter the credit amount

Enter the amount as a positive value on the Supplier Credit Note form. Efimis applies the credit treatment when the transaction is posted.

Example

A supplier issues a credit note for £120.

The negative value on the Purchases screen shows that the credit reduces the amount owed to the supplier.

Review and post

Before posting, check that:

• the correct supplier and office ledger are selected;

• the Credit Note Number matches the supplier’s document;

• the dates are correct;

• every line has been allocated;

• the tax codes and rates are correct;

• matter descriptions explain what the credit relates to; and

• the total matches the supplier’s credit note.

Select:

• Post to post the credit and close the screen; or

• Post & new to post the credit and begin another Supplier Credit Note.

When posted, Efimis:

• Assigns a purchase-series system number beginning PC.
• Debits the gross Supplier Credit Note value, including tax, to the Supplier Credits system account.
• Credits the selected expense account and applicable tax account for an Account allocation.
• Creates a negative incurred purchase disbursement for each Matter allocation.
• Reduces the supplier’s net outstanding balance.
• Displays the transaction as a negative value in Purchases.

Allocate a Supplier Credit Note

Each credit note line must be allocated to either an Account or a Matter.

A single Supplier Credit Note can contain:

• account lines;

• matter lines; or

• a combination of account and matter lines.

Bank and control accounts cannot be selected manually.

Allocate the credit to an account

Use an Account allocation when the credit reduces a firm expense.

For each line:

1. Select Account.

2. Select the relevant expense account.

3. Enter a clear description.

4. Select the applicable tax code.

5. Add a tag where required.

6. Enter the credit amount.

Worked example: credit against a firm expense

The firm previously paid for professional services. The supplier issues a credit note for £120, made up of:

• £100 professional services; and

• £20 tax.

The £120 gross Supplier Credit Note value is debited to the Supplier Credits system account. Efimis credits £100 to the selected Professional Services expense account and £20 to Tax Paid or Tax Suspense, depending on the supplier’s tax-point configuration.

The tax account used depends on the supplier’s tax-point configuration.

Allocate the credit to a matter

Use a Matter allocation when the credit relates to a disbursement recorded against a matter.

For each matter line:

1. Select Matter.

2. Search for and select the relevant matter.

3. Enter a description explaining the credit.

4. Select the required billing tax code.

5. Enter the amount excluding tax where applicable.

6. Review any warning displayed.

7. Continue posting if the details are correct.

Efimis creates a negative incurred purchase disbursement for each matter allocation. The negative disbursement:

• reduces the matter’s unbilled incurred disbursement balance;

• records the value excluding purchase tax;

• retains the selected billing tax code;

• uses the allocation-line description as the disbursement description; and

• does not add to the matter’s existing Credit Notes balance.

The negative purchase disbursement also reduces the purchase disbursement balance shown on the matter, keeping it aligned with the total displayed in the matter’s Purchases tile.

Worked example: credit against a matter disbursement

A matter has an unbilled incurred disbursement of £500. The supplier then provides a credit of £100.

You do not need to select the original disbursement. The credit can still be entered if the original disbursement has already been billed or concluded.

The credit can also be greater than the earlier disbursement. Efimis may display an office credit balance warning, but an authorised user can continue after reviewing it.

The following actions are not available against a disbursement created from a Supplier Credit Note:

• Pay

• Apply Credit Funds

Check the tax treatment

Check whether the amount on the supplier’s credit note includes tax.

• Switch Tax Inclusive on when entering the total amount, including tax.

• Switch Tax Inclusive off when entering the amount before tax. Efimis calculates the tax using the selected tax code.

Example

A supplier issues a credit note for £120, including £20 VAT.

The selected tax code determines the tax rate.

Before posting: Check that the total and tax amount match the supplier's credit note.

View and Manage Supplier Credit Notes

Supplier Credit Notes appear alongside purchases on the Purchases screen.

They can be identified by:

• Type = Credit Note;

• a negative value;

• the supplier’s Credit Note Number; and

• their current status.

Use the Type filter to display:

• Purchases;

• Credit Notes; or

• both transaction types.

You can also search using the supplier’s Credit Note Number.

View the credit note

Select View from the Supplier Credit Note row menu.

The details screen shows:

• the Efimis system number;

• the status;

• the supplier’s Credit Note Number;

• the dates;

• account and matter allocations;

• tax details; and

• attachments.

The allocation grid is read-only after posting. Supporting attachments can still be added.

Understand the status

A partly used or partly refunded Supplier Credit Note remains Open.

Available actions

An open Supplier Credit Note may provide options including:

• View

• View Supplier

• Record Refund

• Unfinalise

New Supplier Credit Notes do not use the previous Issue Supplier Credit Note or Pay with Credit actions.

Pay with Credit may still be available against an eligible purchase when the supplier has an unused credit note created through the previous process or a genuine supplier prepayment. It is not used for Supplier Credit Notes created through the new process.

Use or Refund a Supplier Credit Note

A Supplier Credit Note can:

• reduce a payment to the supplier;

• be partly used, leaving a balance available;

• offset a purchase without moving cash; or

• be refunded into the firm’s bank account.

Use a credit against purchases

Use Office Payment when the supplier has open purchases and open Supplier Credit Notes.

Open credit notes appear automatically in the allocation grid alongside the supplier’s purchases. They are shown as Supplier Credit Note lines.

You can:

• use the full available credit;

• reduce the amount being used;

• remove the credit from the payment;

• combine multiple purchases and credit notes; or

• leave part of the credit open for later.

The purchase and Supplier Credit Note must belong to the same supplier.

Worked example: reduce the supplier payment

The supplier has:

Efimis allocates the payment against both transactions. If both balances are used in full, the purchase and Supplier Credit Note are closed.

Worked example: use only part of the credit

The supplier has an open credit note for £500, but the firm wants to use only £300.

The credit note remains Open with £200 available for later.

If the payment is reversed, Efimis removes the purchase and credit-note allocations and makes the credit available again. Any cash element is also reversed.

Use Supplier Credit Notes in Batch Pay

From Purchases, select the required purchases and Supplier Credit Notes, then select Pay.

Batch Pay:

• groups the selected transactions by supplier;

• displays the purchases and Supplier Credit Notes included for each supplier;

• allows the amount allocated to each transaction to be amended;

• combines all selected transactions for the same supplier into one payment;

• creates one consolidated cashbook entry for each supplier; and

• produces one remittance showing all the transactions included in that supplier’s payment.

This means that when several purchases are paid to the same supplier, only the consolidated payment amount needs to be matched and reconciled against the bank statement.

Worked example: one consolidated supplier payment

The following transactions are selected for the same supplier:

Efimis creates one £900 cashbook entry, rather than a separate entry for each purchase. The user therefore reconciles one £900 payment against the corresponding transaction on the bank statement.

Multiple suppliers: If the batch contains transactions for several suppliers, Efimis creates one consolidated payment and cashbook entry for each supplier.

Zero-value offset: If a supplier’s purchases and credit notes offset to exactly £0.00, the transactions are settled without creating a cashbook entry.

Offsetting a Purchase and Credit Note Without Moving Cash

Use this process when a purchase and Supplier Credit Note cancel each other out and no money is being paid or received.

Worked example: exact offset

The supplier has:

• an open purchase for £300; and

• an open Supplier Credit Note for -£300.

To offset them:

1. Navigate to Purchases.

2. Select the open purchase and Supplier Credit Note.

3. Select Pay.

4. Review both allocations in Batch Pay.

5. Confirm that the supplier subtotal is 0.00.

6. Complete the Batch Pay process.

Efimis identifies this as:

Offset only, no cashbook entry

When completed:

• the purchase and credit note are closed if fully allocated;

• no bank or cashbook transaction is created;

• a supplier-ledger payment is recorded;

• a payment number is assigned; and

• the remittance includes both transactions.

This is not a supplier refund because no money has moved.

Record money refunded by the supplier

Use Record Refund only when the supplier has paid money directly into the firm’s bank account.

This creates an Office Receipt and a cashbook transaction.

From Purchases

1. Navigate to Purchases.

2. Find the open Supplier Credit Note.

3. Open its row actions menu.

4. Select Record Refund.

5. Review the pre-populated credit note.

6. Select the receiving bank account and receipt method.

7. Review the refund amount and posting details.

8. Post the receipt.

The refund defaults to the full open balance. You can reduce it to record a partial refund, but it cannot exceed the available credit.

From the supplier ledger

1. Open the supplier.

2. Open the supplier ledger.

3. Select Post receipt.

4. Review the supplier’s open credit notes.

5. Enter or amend the amount against each credit note.

6. Complete the receipt details.

7. Post the receipt.

When posted, Efimis:

• creates a cashbook receipt;

• allocates it to the Supplier Credit Note;

• reduces the available credit;

• posts against the Supplier Credits account; and

• records a reason identifying the credit note.

For example:

Refund of credit note CN-0038

A partial refund leaves the credit note Open. A full refund changes its status to Closed.

Unfinalise a Supplier Credit Note

Use Unfinalise when an unused Supplier Credit Note was entered incorrectly and needs to be cancelled.

You need the Unfinalise Purchase and Reverse Transaction permissions.

An unused Supplier Credit Note can be unfinalised from:

• its row on the Purchases screen;

• the Purchases selection bar; or

• the related supplier or matter ledger transaction.

Unfinalise the credit note

1. Find the open Supplier Credit Note.

2. Select Unfinalise.

3. Enter the reversal date.

4. Enter a reason.

5. Confirm the action.

Efimis then:

• reverses the accounting postings;

• reverses any linked negative incurred disbursements; and

• changes the status to Cancelled.

A cancelled credit note does not become a Purchase Order. It can be found by including Cancelled in the Purchases status filter.

When Unfinalise is blocked

Reporting

Supplier Credit Notes are included in the following areas:

Aged Creditors

Select Include Credit & Prepayments to include open Supplier Credit Notes.

Each credit note appears:

• on its own row;

• using its own date;

• with its Credit Note Number; and

• at its remaining open balance.

Fully used, refunded or cancelled credit notes are not included as open credits.

Creditors widget

A Supplier Credit Note:

• is counted as due within 14 days on its own date;

• is treated as overdue from the following day;

• is included in the widget’s item count; and

• can be removed using Exclude matter related when it contains a matter allocation.

Existing Supplier Credit Notes

When the new Supplier Credit Notes process is enabled, credit notes created through the previous process remain available. Firms may therefore need to manage existing and new Supplier Credit Notes in parallel until the existing balances have been fully dealt with.

Enabling the new functionality does not change or repost existing Supplier Credit Notes. Continue managing them through the previous workflow until their balances have been fully dealt with.

When the new functionality is enabled:

• New Supplier Credit Notes are created through Purchases → Add Supplier Credit Note.

• Existing Supplier Credit Note balances and transaction history remain unchanged.

• Firms may need to use both workflows in parallel.

• Pay with Credit remains available for eligible credit notes created through the previous process and genuine supplier prepayments.

• New Supplier Credit Notes do not create a supplier prepayment balance.

Troubleshooting and Best Practices

Troubleshooting

Best practices

• Attach the supplier’s supporting credit note where document integration is available.

• Enter the supplier’s Credit Note Number exactly as it appears on the document.

• Use clear descriptions for account and matter allocations.

• Check whether the supplier’s amount includes tax before entering it.

• Review any office credit balance warning before continuing.

• Check the Type, Status and remaining balance before using a credit.

• Reverse related payments or refunds before trying to unfinalise a credit note.

• Review open credits when reconciling the supplier account and Aged Creditors.

• Make sure credit notes created through the previous process continue to be managed through the appropriate existing workflow.