## Documentation Index

Access the complete documentation index at:
https://www.zoho.com/books/kb/llms.txt

Use this file to discover all available documentation pages before proceeding.

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# How do I create credits for customers and vendors using manual journals?

You can pass a journal entry for your customers and vendors. In Zoho Books, customers and vendors are managed as contacts. All transactions related to them are handled within the **Sales** and **Purchases** modules. Therefore, it is not necessary to create journal entries to record receivables and payables. Instead, you can create customer credits and vendor credits using manual journals.

To create credits for [customers](https://www.zoho.com/books/help/credit-note/) and [vendors](https://www.zoho.com/books/help/vendor-credits/) using manual journals:

*   Go to the **Manual Journals** module under **Accountant** on the left sidebar.
*   Click **+** **New Journal** button on the top right side of the page.

![New Journal](/books/kb/images/accountant/new-journal.png)

*   Select the **Date** and enter **Notes**.
    
*   Leave the _Cash based journal_ option under **Journal Type** unselected as you will not be able to create customer credits and vendor credits from a cash based journal.
    
*   Select the currency in which you want to create this manual journal.
    

![Select Currency](/books/kb/images/accountant/select-currency.png)

The accounts you have to choose to [create a customer credit](/books/kb/accountant/credits-manual-journals.html#create-customer-credits) differs from the accounts you have to choose to [create a vendor credit](/books/kb/accountant/credits-manual-journals.html#create-vendor-credits).

## Create Customer Credits

*   Select the account as **Accounts Receivable**.
    
*   Select the customer for whom you want to create a credit from the contact dropdown and enter the amount that has to be credited in the **Credit** column.
    
*   Select the account which needs to be debited in the next line and enter the debit amount.
    
*   Click **Save and Publish** to publish this journal.
    

![Accounts Receivable](/books/kb/images/accountant/accounts-recievable.png)

The credits can be applied to the invoices of the customer you’ve selected by clicking the **Apply** button next to Customer Credits above the journal which you’ve created.

![Customer Credits](/books/kb/images/accountant/customer-credits.png)

* * *

## Create Vendor Credits

*   Select the account as **Accounts Payable**.
*   Select the vendor for whom you want to create a credit from the contact dropdown and enter the amount in the Debit column. This amount will be the vendor credit.
*   Select the account which needs to be credited in the next line and enter the credit amount.
*   Click **Save and Publish** to publish the journal.

![Accounts Payable](/books/kb/images/accountant/accounts-payable.png)

The credits can be applied to the bills of the vendor you’ve selected by clicking the **Apply** button next to Vendor Credits above the journal you’ve created.

![Vendor Credits](/books/kb/images/accountant/vendor-credits.png)

You can create credits for multiple customers and vendors in the same journal by repeating the steps mentioned above.

**Note:** You’ll not be able to create credits if Accounts Receivable or Accounts Payable is associated with bank/cash/card accounts.

Also, you can apply customer credits to the invoices of the respective customer directly from the **Invoices** module and vendor credits to the bills of the respective vendor directly from the **Bills** module.

![Invoices Credits](/books/kb/images/accountant/invoices-credits.png) ![Bills Credits](/books/kb/images/accountant/bills-credits.png)

**Note:** You can apply these credits only to an invoice or a bill. You cannot use them to make payments directly. Credits recorded via advances, credit notes, or vendor credits cannot be applied to journals created for tracking receivables and payables.