All 21 Payment Runs questions
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How are invoices selected and prioritized in a payment run? How does an early-payment discount decision get evaluated? What controls should surround a payment run to prevent errors and fraud? What is a payment proposal (pre-run) and how is it reviewed? What is the difference between ACH, wire, and check payments in terms of risk and cost? How does a purchasing card (P-card) program change AP payment processing? What is a virtual card and why do companies use it for payments? How are payment holds and blocks managed within the run process? How do payment runs support cash flow and working capital management? What is positive pay and how does it prevent payment fraud?
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Accounts Payable & Receivable › Payment Runs

How are supplier credits and deductions applied within a payment run?

Intermediate

Answer

Open credit notes and agreed deductions for the vendor are netted against that vendor's due invoices so only the net is paid. The remittance shows the credits applied. If credits exceed invoices due, the balance carries forward until enough invoices exist or a refund is requested from the supplier.
Vendor due: invoices 5,000; open credit 1,200.
  Net payment = 3,800; remittance lists both.
Real-world example A vendor's $1,200 return credit is applied in the run, so the payment is $3,800 instead of $5,000.

Common follow-ups: What if credits exceed invoices due? | How are credits shown on remittance?

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All 21 Payment Runs questions