> For the complete documentation index, see [llms.txt](https://docs.xorosoft.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xorosoft.com/xoroerp-1/purchase/vendor-credit/what-is-vendor-credit/applying-vendor-credit.md).
# Applying Vendor Credit
Vendor credits can be applied directly while making a bill payment. This is useful when a vendor has an available credit balance that can be used to reduce or fully offset the amount due on a bill. Applying vendor credits during payment helps ensure that outstanding credits are utilized efficiently and vendor balances remain accurate.
### Applying Vendor Credit to a Bill
To apply a vendor credit to a bill, follow the steps below:
1. Open the required Bill and click **Options → Pay Bill**.
2. On the **Bill Payment** screen, click on the amount displayed under the **Credit** column for the bill to which you want to apply the vendor credit.
3. The **Add Credit** window opens and displays all available vendor credits for the selected vendor under the **Vendor Credits** tab.
4. If you want to apply a specific credit amount, click the value under the **Apply** column, enter the amount to apply, and click the **Tick** icon to confirm.
5. Now, select the required **Payment Method** and verify the remaining **Pay Amount**.
6. Click **Pay Bill** (or **Pay Selected Bill(s)**) to complete the payment.
7. If the **selected payment method** is **Cheque**, enter the **cheque number** and click **Save & Pay Bills**.
8. Once the payment is processed successfully, the bill status is updated accordingly, and the applied vendor credit is reflected against the bill.
### Refunding a Vendor Credit
If a vendor refund needs to be issued instead of applying the vendor credit to a bill, you can record the refund directly from the **Vendor Credit Centre**. This is useful when the vendor has refunded the amount through a payment method such as a credit card, cash, or bank transfer.
To record a vendor refund, follow the steps below:
1. Navigate to **Menu → Purchase → Vendor Credit → Vendor Credit Centre** and select the required vendor credit record.
2. Right-click the vendor credit and select **Refund Balance**.
3. The **Vendor Refund** window opens with the vendor credit details automatically populated.
4. Select the appropriate **Refund Via** payment method (for example, **Credit Card**) and complete the required refund details.
5. Click **Record Refund** to post the vendor refund.
6. Once the refund is recorded successfully, the refunded amount is deducted from the vendor credit balance, and the vendor credit status changes to **refunded** in the **Vendor Credit Centre**.
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