# Supplier credit notes for Dynamics 365 Finance

Dynamics 365 Finance covers part of supplier credit notes on its own. Pulsify reads vendor credit note documents like invoices and flags one with a missing or unknown original invoice.

A supplier vendor credit note reduces what you owe a vendor, usually for returns, short deliveries or a pricing error.

## What Dynamics 365 Finance does on its own

In Finance, a supplier credit note is settled against its invoice on the Settle transactions page, opened from the Vendors page. You mark both the credit note and the invoice and post. A cash discount can be calculated on the credit note during settlement.

## What you need in Dynamics 365 Finance

- Accounts payable clerk role
- Enable credit invoicing for vendor invoices feature, for references to original invoices

## Setting it up in Dynamics 365 Finance

Where to find it: Vendors > Settle transactions

1. Enter the credit note for the vendor.
2. Open the Vendors page and choose Settle transactions.
3. Mark the credit note and the invoice it relates to.
4. Check the cash discount shown for the credit note at the foot of the page.
5. Select Post and review the completed settlement on the Vendor transactions page.

## Good to know in Dynamics 365 Finance

- Microsoft's example shows a 1% cash discount reducing a 200.00 credit note to 198.00, with the 2.00 discount shown separately.
- Vendor transactions then shows the invoice balance, the credit note and the discount.
- Enable credit invoicing for vendor invoices in Feature management to store a reference to the original invoice on a credit note.

## How to do it in Dynamics 365 Finance

### How to apply a vendor credit note to a vendor invoice in Dynamics 365 Finance

In Dynamics 365 Finance, enter the vendor credit note for the vendor, then allocate it to the vendor invoice it credits. Pay the balance that is left. Full guide: https://www.pulsify.tech/how-to/apply-a-supplier-credit-note-in-dynamics-365-finance/

## What Pulsify adds

1. Forward the credit note like any invoice. Pulsify recognises it.
2. Pulsify reads it line by line and looks for the original invoice.
3. It flags a credit note with a missing, unknown or smaller original invoice.
4. On approval the credit is created in Dynamics 365 Finance against the original bill.

Pulsify connects to Dynamics 365 Finance. We set up the connection for you.

What Pulsify does not do:

- Check the credit is applied before the next payment run, so you do not pay the full bill.

## Common questions

### How do I settle a supplier credit note in Finance?

Open Settle transactions from the Vendors page, mark the credit note and the invoice, check any cash discount, and select Post. The Vendor transactions page then shows the balance, the credit note and the discount.

### Can a credit note carry the original invoice number?

Yes. Enable the Enable credit invoicing for vendor invoices feature in Feature management. It lets you reference the original invoice on credit notes for purchase orders, invoice journals, invoice registers and general journals.

### Should a credit note go through approval?

Yes. It changes what you owe. The person who agreed the return or price fix is often the right approver.

## Sources

- https://learn.microsoft.com/en-us/dynamics365/finance/accounts-payable/settle-partial-vendor-payment-discounts-vendor-credit-notes
- https://learn.microsoft.com/en-us/dynamics365/finance/accounts-payable/gbl-original-invoice-numbers-credit-notes-ap

Source: https://www.pulsify.tech/supplier-credit-notes-for-dynamics-365-finance/ (last checked 2026-10-19)