An unused supplier credit should be confirmed with the supplier and reconciled to the company’s purchase ledger before it is applied or written off. Keep the original credit document, the reason for it and any settlement terms. A balance on an old statement does not establish that the credit remains available without further conditions.
Establish what created the credit
Locate the original invoice, credit note, return or overpayment evidence. Identify the legal supplier, company customer and currency. A supplier group may maintain separate accounts, so a credit with one entity should not automatically be applied to another entity’s invoice.
Check whether the credit has already been used in the company’s books or in a payment calculation. An administrator may have deducted it from a later payment without updating the reconciliation, leaving an apparent unused balance.
Request a current confirmation
Ask the supplier through a known channel for the remaining balance and the available options. Record any conditions, expiry statement or required refund process and give disputed terms to the appropriate commercial adviser. Do not promise a refund merely because the company no longer expects to buy from the supplier.
Example: the credit belongs to a closed customer account
The company has opened a new account with the same supplier, while the credit remains under the old customer number. Obtain the supplier’s instructions and evidence of any approved transfer. Do not offset it against the newest invoice without a traceable allocation.
Authorise the accounting outcome
Ask the accountant about the appropriate treatment of a confirmed credit, refund or uncollectible amount. Keep the decision separate from the supplier correspondence. A credit note and a cash refund are different stages and should not both clear the same balance twice.
Close after the evidence is reconciled
For an application to a later purchase, retain the invoice and allocation. For a refund, match the bank receipt to the credit. For an approved adjustment, keep the explanation and authority. Review older credits periodically so they remain visible when staff or suppliers change.
Related practical guidance
For the surrounding records and responsibilities, see bookkeeping basics, company records to keep, bookkeeping and accounting.
Official guidance: IRAS official guidance.
Help with your company records
For accounting, bookkeeping and related compliance support, contact Raffles Corporate Services at [email protected] or WhatsApp +65 8501 7133. Tell us which records or process need attention so we can discuss the relevant next steps.
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