Overview
The Send AR Balance to AP feature allows you to convert selected Accounts Receivable (AR) balances into an Accounts Payable (AP) credit. This is useful when a vendor owes your business money but chooses to issue a credit against future purchases instead of sending a payment.
Rather than manually writing off the AR balance and creating a separate AP credit, this feature transfers the balance directly from AR to AP while maintaining an accurate accounting trail.
Note: This feature is available only if your organization has the Accounting Module enabled.
When to Use This Feature
Use Send AR Balance to AP when a vendor owes your business money but provides a vendor credit instead of a check or electronic payment.
Common examples include:
Vendor return credits
Damage allowances
Manufacturer reimbursements
Warranty reimbursements
Service claim reimbursements
Parts reimbursements
Promotional or rebate credits
Example
A manufacturer agrees to reimburse your company $500 for repairing a damaged product.
Initially, you create an AR invoice because you expect reimbursement.
Instead of sending a payment, the manufacturer issues a $500 credit memo to be applied against your next vendor invoice.
Rather than:
Writing off the AR invoice, and
Manually creating an AP credit,
you can transfer the AR balance directly into Accounts Payable.
Access the Customer's AR Account
Navigate to Accounts Receivable.
Locate and open the customer or vendor account that contains the outstanding AR balance.
For example:
Vendor: Whirlpool Corporation
Outstanding AR Balance: $4,712.28
Review the open invoices before creating the AP credit.
Create an AP Credit
Select AP Credit.
The Create AP Credit window opens.
This screen displays all eligible AR invoices that can be transferred into Accounts Payable.
Select the AR Invoices to Transfer
Choose the invoices you want to convert into an AP credit.
You may:
Transfer a single invoice
Transfer multiple invoices
Leave other AR invoices untouched
As invoices are selected, the system calculates the total credit amount that will be transferred.
Select the Posting Location
Choose the appropriate accounting location for the AP credit.
For organizations with multiple locations, this determines where the transaction will be recorded.
Adjust Credit Amounts (Optional)
Before creating the AP credit, you can adjust the credit amount for individual invoices.
This is useful when:
The vendor reimburses only part of the invoice.
Negotiated reimbursement amounts differ from the original AR invoice.
Warranty reimbursements are reduced.
Parts credits differ from labor reimbursements.
The flexibility to modify individual credit amounts allows you to accurately reflect the vendor's actual credit.
Select the AP Vendor
Choose the vendor that will receive the Accounts Payable credit.
In many cases, this will be the same vendor shown on the AR account.
However, you are not limited to the same vendor.
Example
A warranty reimbursement may originate from Whirlpool, but the credit may actually be issued through a parts distributor such as:
Marcone
V&V Appliance Parts
Another authorized distributor
In these situations, you can transfer the AR balance to a different AP vendor while preserving the original AR transaction.
Complete the AP Credit Information
Before saving the credit, review and complete the remaining fields, including:
Credit Date
Credit Memo Number
Credit Amount
AP Trade Account (if not automatically populated)
Verify all information before continuing.
Attach Supporting Documentation
If the vendor provided supporting documentation, such as a credit memo or reimbursement notice:
Upload the document.
Attach it to the AP credit before saving.
Attaching supporting documents creates a complete audit trail and makes future research significantly easier.
Save the AP Credit
After reviewing the information:
Select Save.
The system will:
Create the Accounts Payable credit.
Reduce the corresponding Accounts Receivable balance by the transferred amount.
Make the credit available for use against future AP invoices.
What Happens After the Transfer?
Once the transfer is complete:
The selected AR invoices are reduced by the transferred amount.
An AP credit is created.
The credit can be applied to future vendor invoices during Accounts Payable processing.
Both AR and AP remain accurately balanced without requiring manual journal entries or write-offs.
Best Practices
Use this feature only when a vendor issues a credit instead of sending payment.
Transfer only the invoices associated with the vendor credit.
Review reimbursement amounts before creating the AP credit.
Adjust credit amounts when negotiated reimbursements differ from the original invoice amounts.
Attach vendor credit memos or supporting documentation to the AP credit for future reference.
Verify the correct AP vendor before saving, especially when reimbursements are issued through a distributor rather than the original manufacturer.
Summary
The Send AR Balance to AP feature streamlines the process of converting vendor receivables into Accounts Payable credits.
Using this feature, you can:
Transfer outstanding AR balances directly into AP.
Create vendor credits without manual write-offs.
Select specific invoices to transfer.
Adjust reimbursement amounts when necessary.
Apply credits to the appropriate vendor—even if different from the original AR account.
Maintain a complete accounting and documentation trail.
This functionality simplifies vendor credit processing while improving accuracy and reducing manual accounting work.