Why it matters for wholesalers
- A vendor credit note that is never applied reduces nothing. The bill gets paid in full and the credit sits as an open balance.
- Returns, rebates and settlement documents look like credits but follow different rules. Mixing them loses the trail.
For wholesalers in Dynamics 365 Finance
- For goods going back, create a purchase return order. On a new purchase order choose Purchase > Credit note to copy lines from a vendor invoice. Invert sign and Copy charges are selected automatically.
- Microsoft lists cases the return PO covers: goods returned, an invoice entered without a receipt, a partial return, unplanned receipts and vendor buyback or consignment return.
- Turn on Enable credit invoicing for vendor invoices in Feature management. On the order choose Credit invoicing and enter the reason and the original invoice reference.
- A cash discount on the credit note is worked out when you settle it against the invoice on Settle transactions.
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.
Vendor transactions then shows the invoice balance, the credit note and the discount.
What you need and the setup steps: Supplier credit notes for Dynamics 365 Finance.
Example
Example Glass Jars Pty Ltd delivers 1,000 jars. 80 arrive broken. The warehouse logs a short delivery and the supplier issues a vendor credit note for 80 jars.
| Line | Amount | What the check finds |
|---|---|---|
| Original invoice 7730, 1,000 jars | $4,000.00 | Paid at $4.00 a jar |
| Credit note CN-402, 80 jars returned | -$320.00 | Matches the damaged quantity on the delivery docket |
| Net payable after credit | $3,680.00 | Credit applied against invoice 7730 |
The credit is matched to invoice 7730 through the delivery docket and applied. The wholesaler pays $3,680 plus GST, not the full invoice.
Common mistakes
- Letting the supplier issue a credit but never applying it to the invoice it belongs to.
- Accepting a credit for a lower quantity than the damage report shows.
Step-by-step guides for Dynamics 365 Finance
What Pulsify adds
Pulsify reads vendor credit note documents like invoices and flags one with a missing or unknown original invoice. Pulsify connects to Dynamics 365 Finance. We set up the connection for you. More about supplier credit notes in Pulsify or Pulsify for wholesalers.
More help
- Supplier credit notes in Kinetic for wholesalers
- Supplier credit notes in MYOB Acumatica for wholesalers
- Supplier credit notes in NetSuite for wholesalers
- Duplicate invoice checks in Dynamics 365 Finance for wholesalers
- PO matching in Dynamics 365 Finance for wholesalers
- Supplier price checks in Dynamics 365 Finance for wholesalers
- Supplier statement reconciliation in Dynamics 365 Finance for wholesalers
- All Dynamics 365 Finance how-to guides
Sources
Last checked 2026-10-19.
- learn.microsoft.com/en-us/dynamics365/supply-chain/procurement/tasks/create-purchase-return-order
- learn.microsoft.com/en-us/dynamics365/finance/accounts-payable/gbl-original-invoice-numbers-credit-notes-ap
- learn.microsoft.com/en-us/dynamics365/finance/accounts-payable/settle-partial-vendor-payment-discounts-vendor-credit-notes
- www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/tax-invoices
Common questions
How do I record a supplier credit for returned stock in Finance?
Create a purchase return order, copy the lines from the vendor invoice with the Credit note action and ship the goods back. If you use credit invoicing, add the original invoice reference. Then settle the credit note against the invoice from the Vendors page.
How do I make sure a short delivery produces a credit?
Book the real received quantity on the product receipt the same day. The difference between ordered and received is the claim. Send the docket to the supplier and ask for the credit before the bill is paid.
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.
Pulsify setup guides
Want this done for you?
Book a call to see how Pulsify handles supplier credit notes in Dynamics 365 Finance for wholesalers.