The quick answer
Go to Transactions > Payables > Enter Vendor Credits and choose the vendor. On the Items tab, open the Expenses subtab and add a line for the same expense account the original bill used, for the amount you're reversing. Leave Auto Apply cleared if you want to pick the bill yourself, then save. The bill credit debits Accounts Payable and credits the expense account, and the vendor's Balance drops by the credit amount right away. The original bill stays Open until you apply the credit to it.
The screenshots show sample data. Person and company names are fictional. Use your own vendor, accounts and amounts when following the steps.
Before you start
In this example, Alex Morgan at Example Supply Co. owes Brightline Consulting Group 6,180.00 on two open bills. VB-3318 is 4,620.00 for a warehouse layout study, charged to 6620 Consulting Services. VB-3342 is 1,560.00 for forklift safety training. The layout study was canceled before anyone paid for it, and the vendor agreed to credit it in full as BCG-CR-0917.
The service was bought against a GL account, not an item, so the credit goes on the Expenses subtab. If the original bill used an item, use the Items subtab instead so the credit follows the item's accounts. For goods you're physically sending back, use the vendor return process instead.
You need permission to enter vendor credits, and the credit's Date and Posting Period have to fall in an open period. If your account routes bill credits for approval, the credit doesn't post until it's approved, so the GL impact and balance change described here come after that.
01. Check the vendor balance and open bills
Go to Lists > Relationships > Vendors and open Brightline Consulting Group. On the Financial subtab, under Balance Information, Balance is 6,180.00 (USD). Write it down. You'll compare it with the balance after the credit posts.
Scroll down to the Transactions subtab. Two bills are Open: VB-3342 for 1,560.00 and VB-3318 for 4,620.00. Together they make up the 6,180.00 balance.
02. Check the account on the original bill
Click VB-3318 to open the bill for the canceled study. Its Total is 4,620.00. On the Expenses and Items subtab, open Expenses. The single line is 6620 Consulting Services for 4,620.00, with the memo Warehouse layout study, phase 2, Department Operations and Location Example Supply HQ.
To reverse a canceled service, the credit goes to that same account. Crediting a different one would leave 6620 overstated and push the reversal into an account that never carried the cost. A rebate or negotiated settlement can belong somewhere else under your accounting policy.
03. Start the bill credit
Go to Transactions > Payables > Enter Vendor Credits. The Bill Credit form opens.
- In Reference No., enter the vendor's credit number, BCG-CR-0917.
- In Vendor, choose Brightline Consulting Group. Account fills with 2010 Accounts Payable and Subsidiary with Example Supply US. Check both. To offset VB-3318 later, the credit needs the same subsidiary, currency and payables account as the bill.
- Keep Date 09/24/2026 and Posting Period Sep 2026.
- In Memo, enter Phase 2 study canceled.
Leave the header Amount blank. NetSuite totals it from the lines, and the saved credit shows 4,620.00.
04. Add the expense line
Scroll to the Items tab. Some forms label it Expenses & Items. Next to Unapplied, leave Auto Apply cleared. When it's checked, NetSuite applies the credit to the vendor's eligible open bills on save, oldest first. Eligible means the same subsidiary, currency and payables account. Here the oldest bill happens to be VB-3318, but with a different vendor it might not be. NetSuite can remember the last setting, so look at the checkbox on every credit.
On the Expenses subtab, add one line:
- Account: 6620 Consulting Services
- Amount: 4620.00
- Memo: Phase 2 study canceled
- Department: Operations, the same as the bill's line
Click Add. The subtab caption changes to Expenses 4,620.00, and Unapplied shows 4,620.00. Applied stays 0.00.
Location filled with Example Supply HQ, the same as the bill, and Department Operations matches the bill's line. The credit's expense GL line carries those values, so the reversal lands in the same department and location the cost went to. If the bill had a class, copy that too.
05. Save and read the GL impact
Click Save. The saved bill credit shows Unapplied 4,620.00 and Applied 0.00. It has posted, but it isn't matched to a bill yet. If your account routes bill credits for approval, check that the credit is approved before you read its GL impact.
Open the GL Impact subtab. 2010 Accounts Payable is debited $4,620.00 and 6620 Consulting Services is credited $4,620.00. The bill did the opposite: it debited 6620 and credited Accounts Payable. So the cost comes back out of the account it went into, and the liability to the vendor goes down by the same amount.
This is an exact mirror only because the credit has one untaxed expense line in the same currency. Tax, item lines, amortization, foreign exchange, multi-book accounting or custom GL plug-ins can add or change lines.
06. Confirm the vendor balance fell
Go back to Lists > Relationships > Vendors and open Brightline Consulting Group again. On the Financial subtab, Balance is now 1,560.00 (USD). That's 6,180.00 minus the 4,620.00 credit. The credit lowered what you owe as soon as it posted, even though it isn't applied to anything.
On the Transactions subtab, the Bill Credit BCG-CR-0917 is listed at -4,620.00. VB-3318 is still Open for 4,620.00. An unapplied credit reduces the vendor balance but doesn't close any particular bill. The bill closes when you apply the credit to it.
Check the result
- The saved bill credit shows Unapplied 4,620.00 and Applied 0.00.
- GL Impact debits 2010 Accounts Payable and credits 6620 Consulting Services for $4,620.00.
- The vendor's Balance went from 6,180.00 to 1,560.00.
- The Transactions subtab lists BCG-CR-0917 at -4,620.00.
- VB-3318 is still Open for 4,620.00 until you apply the credit to it.
To close VB-3318, apply the credit from its Apply subtab or on a bill payment. See how to apply existing vendor credits to bills.
Common questions
How do I enter a vendor credit against an expense account instead of an item?
Go to Transactions > Payables > Enter Vendor Credits, choose the vendor, and add the line on the Expenses subtab with the expense account and amount. In this example that's 6620 Consulting Services for 4,620.00. Use the Items subtab only when the original bill used an item, so the credit follows that item's accounts.
What does Auto Apply do on a vendor credit?
When Auto Apply is checked, NetSuite applies the credit to the vendor's eligible open bills when you save, starting with the oldest. Leave it cleared to save the credit unapplied and choose the bill yourself later. NetSuite can remember the last setting, so look at it on every credit.
Why did the vendor balance drop but the bill is still open?
The credit reduces what you owe the vendor as soon as it posts, so the balance went from 6,180.00 to 1,560.00. VB-3318 stays Open because nothing has been applied to it yet. The bill closes when you apply the credit to it.
Does a vendor credit reduce accounts payable before it's applied?
Yes. Once it posts, the credit debits Accounts Payable and credits the expense account, whether or not it's applied. Here that's 4,620.00 out of 2010 Accounts Payable and 6620 Consulting Services. Applying it later matches it to a bill. In a single currency, that doesn't post those amounts again.
Which account should a vendor credit post to for a canceled service?
The same expense account the original bill used, so the cost comes back out of the account it went into. VB-3318 was charged to 6620 Consulting Services, so the credit goes there too. A rebate, settlement or correction to a closed period can call for a different account, depending on your accounting policy.
Can I start the credit from the bill instead?
Often, yes. The bill's Credit button, when your role and form show it, opens a bill credit filled in from that bill, including its vendor and lines. Check the amount and lines before you save, especially for a partial credit.
Can I enter a partial vendor credit?
Yes. Enter only the amount the vendor agreed to credit. If you apply a partial credit to a bill, the rest of the bill stays open.
What if the bill was already paid?
The credit still posts and reduces the vendor balance, but there's no open amount on that bill to apply it to. You can leave it unapplied for the vendor's next bill, or record the vendor's refund the way your account handles vendor refunds.
How do I reverse a vendor bill for a canceled service without deleting it?
Enter a bill credit for the canceled amount against the same expense account, then apply it to the bill. The bill and its history stay in place, and the credit carries the reversal with its own date, reference and memo.