How to Record Past Supplier Credit Notes

Overview:

Recording past supplier credit notes allows businesses to establish historical Accounts Payable (AP) adjustments that existed before the accounting start date. This process is commonly performed during system migration, opening balance setup, or when transferring records from a legacy accounting system.

Past supplier credit notes are recorded to reflect unapplied supplier credit balances that reduce Accounts Payable balances in the new system. These transactions help maintain accurate supplier balances, aging reports, and payment reconciliation records after migration.

Depending on business requirements, past transactions may be recorded either as:

• Consolidated balances per supplier, or

• Itemized historical credit note records based on original references

When recording historical transactions, ensure that:

• The transaction date is earlier than the accounting start date

• Outstanding balances are verified against prior accounting records

• Related historical bills, payments, or debit notes are also considered to maintain accurate supplier balances

The Accounts Payable opening balance is derived from the net effect of:

• Past Supplier Bills

• Past Supplier Debit Notes

• Past Pay Bills

• Past Supplier Credit Notes

Only unapplied supplier credit note balances before the accounting start date should be recorded.

Scenario:

Your company is migrating from a legacy accounting system to N3 AI Accounting for the January to December 2026 financial year. As part of the migration, the company needs to record all unapplied supplier credit notes dated before January 1, 2026, so that supplier balances and Accounts Payable reports remain accurate in the new system.

Some suppliers have a single outstanding balance, while others require individual historical credit notes to be recorded for tracking and reconciliation purposes.

Prerequisites:

• Supplier master records must already exist in the system.

• The financial year and opening balance period must already be configured.

• Unapplied supplier credit note balances must be verified against the previous accounting records before migration.

Procedure:

1. Prepare the list of unapplied supplier credit notes from the legacy records or prior accounting system.

2. Verify that the credit note balances represent unapplied amounts as of the accounting start date.

3. Review whether the credit notes will be recorded as:

• Consolidated balances per supplier, or

• Individual historical credit note transactions

4. Confirm that the transaction dates of the past supplier credit notes are earlier than the accounting start date.

5. In the navigation pane, go to Account Payable > Credit Notes.

6. Click Add to create a new past supplier credit note entry for each required supplier record.

7. Enter the document date first (must be earlier than the accounting start date). The system automatically classifies the document as a past supplier credit note.

8. Select the supplier and applicable historical credit note details, such as:

• Document Number

• Ref No.

• Description

• Reason

• Balance

• Tax Code

Note:

If Tax/VAT details are entered for historical reference purposes, the VAT portion does not generate a separate posting to the VAT General Ledger account because only the unapplied payable adjustment contributes to the Accounts Payable opening balance.

9. Review the entered amounts carefully and Save the transaction.

10. Repeat the process for all remaining unapplied supplier credit notes.

11. After all entries are completed, review the reflected opening Accounts Payable balance in General Ledger > Opening Balances to verify that the recorded balances match the historical records from the previous accounting system.

Application (General Use Cases):

• Establish opening Accounts Payable adjustments during system migration

• Transfer unapplied supplier credit balances from a legacy accounting system

• Maintain supplier aging continuity after go-live

• Support historical balance reconciliation

• Help maintain continuity and accuracy of Accounts Payable reporting

• Retain reference to historical supplier credit note records for audit and tracking purposes

System Scope: QNE AI Cloud Accounting / N3 AI Accounting