---
title: Payables 2.0 - Applying Credit Memos (Business Central)
slug: svb/payables-20-applying-credit-memos-business-central
docTags: kOBW7Pa05SaMsJIm9Vdtp
createdAt: 2026-05-14T21:22:32.620Z
---

A purchase credit memo is a document issued by the seller of goods or services to the buyer, reducing the amount the buyer owes to the seller under the terms of an earlier invoice.

There are three methods in Business Central to apply credits: the Applies to Doc. method, copying document lines, or manually creating the lines. Follow the steps in this guide to learn how to apply credits with these methods.

***

## Applies to Doc. Method

This method involves posting the credit memo first and then applying it to the open invoice from the Vendor Ledger Entries.

::::WorkflowBlock
:::WorkflowBlockItem
### Navigate to Vendor

Navigate to the vendor you would like to apply the memo to. 

Click **Purchasing** and then **Vendors**. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/0HwYWoC8E7ctPyTnchJbw_screenshot-2023-11-07-at-83146-am.png" size="80" width="800" height="132" position="center" caption="Click Vendors " darkWidth="800" darkHeight="132" showCaption="true"}

Next, click on the vendor you would like to create the memo for. 

::Image[]{src="https://app.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/85eJG1BeZIFt-PP96zd4V-20251201-182810.png" size="80" width="1372" height="606" position="center" darkWidth="1372" darkHeight="606" showCaption="false"}

On the Vendor card, select** New Document **and then click on **Purchase Credit Memo.** 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/MP8Ucmr2LclS_d90QIPCl_screenshot-2023-11-07-at-83622-am.png" size="80" width="800" height="226" position="center" caption="Select Purchase Credit Memo" darkWidth="800" darkHeight="226" showCaption="true"}
:::

:::WorkflowBlockItem
### Create & Post the Credit Memo 

Next, create the credit memo by entering the required values. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/Ao90BLYcgZdTzzh0pA5Ne_screenshot-2023-11-07-at-83743-am.png" size="80" width="800" height="478" position="center" caption="Create the Credit Memo" darkWidth="800" darkHeight="478" showCaption="true"}

Once done, click **Post**. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/V4_Jc11QtBfg-xihr55ZF_screenshot-2023-11-07-at-83826-am.png" size="58" width="800" height="653" position="center" caption="Click Post" darkWidth="800" darkHeight="653" showCaption="true"}
:::

:::WorkflowBlockItem
### Apply the Credit Memo

Navigate back to the Vendor card and select **Vendor --> Vendor Ledger Entries**. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/a7zRY1JqpSX4AJi-IJLMY_screenshot-2023-11-07-at-84104-am.png" size="80" width="800" height="123" position="center" caption="Select Vendor Ledger Entries" darkWidth="800" darkHeight="123" showCaption="true"}

Locate the credit memo and click on the three dots beside it. Select **Apply Entries.** 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/k8prem-pwQDq3wyGWmyO3_screenshot-2023-11-07-at-84120-am.png" size="80" width="800" height="522" position="center" caption="Click on Apply Entries" darkWidth="800" darkHeight="522" showCaption="true"}

Find the invoice you would like to apply the credit to. 

::Image[]{src="https://app.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/3veNXy-AUeh5e2qMFTPR9_screenshot-2023-11-07-at-84355-am.png" size="80" width="877" height="906" position="center" caption="Find the Invoice" darkWidth="877" darkHeight="906" showCaption="true"}

Set the ID by selecting the invoice and clicking **Set Applies-to ID**. When done, select **Post Application**. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/UioNIqjP5gMGD_lVN4J_S_screenshot-2023-11-07-at-84257-am.png" size="80" width="800" height="819" position="center" caption="Click Set to Applies-to ID" darkWidth="800" darkHeight="819" showCaption="true"}
:::

:::WorkflowBlockItem
### Pay Reduced Invoice(s)

Pay the invoice(s) as you would normally.
:::
::::

***

## Copying Document Lines

This method ensures the credit memo is applied directly to the invoice before the memo is posted by copying the original posted invoice's details.

:::::WorkflowBlock
:::WorkflowBlockItem
### Navigate to Purchase Credit Memos

Navigate to the Purchase Credit Memos page from the Purchasing module.

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/xuPkS8YBi75SEKkXRcTK-_screenshot-2023-03-01-at-20021-pm.png" size="80" width="800" height="268" caption="Select Purchase Credit Memo" position="center" darkWidth="800" darkHeight="268" showCaption="true"}

Select the **+ New **button to create a new Purchase Credit Memo. 
:::

:::WorkflowBlockItem
### Copy Credit Memo Lines

To apply lines from an existing posted invoice, go to **Prepare → Copy Document.**

::Image[]{src="https://app.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/j3GGUILmHBzCiSdNxgs5k_screenshot-2023-03-01-at-20235-pm.png" size="80" width="1440" height="195" position="center" caption="Click Copy Document" darkWidth="1440" darkHeight="195" showCaption="true"}

Select **Posted Invoice** for the** Document Type** and enter the **Document No.** to apply the credit memo. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/U3SfOAxqUdJ3NIPpFKpM4_screenshot-2023-03-01-at-20402-pm.png" size="56" width="800" height="810" caption="Click OK" position="center" darkWidth="800" darkHeight="810" showCaption="true"}

Once selected, select **OK** to copy the complete document.

The invoice details and line items will now copy into the Credit Memo page. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/Vi7SMx04NnF0DdqNf9uG7_screenshot-2023-03-01-at-20415-pm.png" size="80" width="800" height="481" caption="View Credit Memo Details" position="center" darkWidth="800" darkHeight="481" showCaption="true"}
:::

:::WorkflowBlockItem
### Modify the Credit Memo

Modify the document lines as needed. Once the lines match the vendor's credit memo, enter the vendor's reference number in the **Vendor Cr. Memo No.** field.

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/YZUYTfSSUv-gOBwmZGolH_screenshot-2023-03-01-at-20438-pm.png" size="80" width="1655" height="1002" caption="Modify the Memo" position="center" showCaption="true"}
:::

::::WorkflowBlockItem
### Confirm Applies-to Doc. No. 

Confirm the **Applies-to Doc. No.** is correct and the credit memo will be applied to the right invoice. The invoice must be marked as **Open** to apply the credit memo and pay the invoice with a reduced amount due.  

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/NoveN7xvcqw6XfEkArUoe_screenshot-2023-03-01-at-20450-pm.png" size="80" width="1647" height="998" caption="Confirm Applies-to Do. No. " position="center" showCaption="true"}

:::hint{type="info"}
**NOTE:** This field is automatically populated with the Invoice Number of the source document. Before posting the credit memo, you must verify the number. If it is incorrect or points to a closed invoice, you are required to change this value to an **Open** invoice whose balance you intend to reduce.
:::
::::

:::WorkflowBlockItem
### Post the Credit Memo

After confirming all details, post the document by selecting **Post. **

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/MQ9u5hJsHCrp-JfW72GUK_screenshot-2023-03-01-at-25000-pm.png" size="80" width="1626" height="198" caption="Post the Credit Memo" position="center" showCaption="true"}
:::

:::WorkflowBlockItem
### Confirm the Reduced Amount

On the Posted Purchase Invoice page, locate the invoice on which you applied the credit memo. On this page, you can confirm that the amount has been successfully reduced before attempting to pay the invoice. 

::Image[]{src="https://app.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/L9xg6PsC6VBmcc8RhdOHa_screenshot-2023-03-01-at-25110-pm.png" size="80" width="1424" height="53" position="center" caption="Confirm the Reduced Amount" showCaption="true"}
:::

:::WorkflowBlockItem
### Pay Reduced Invoice(s)

Pay the invoice(s) as you would normally.
:::
:::::

***

## Manually Creating Document Lines

Use this method when the credit memo lines need to be entered from scratch without copying an existing invoice.

:::::WorkflowBlock
:::WorkflowBlockItem
### Navigate to Purchase Credit Memos

Navigate to the Purchase Credit Memos page from the Purchasing module.

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/xuPkS8YBi75SEKkXRcTK-_screenshot-2023-03-01-at-20021-pm.png" size="80" width="800" height="268" caption="Select Purchase Credit Memo" position="center" darkWidth="800" darkHeight="268" showCaption="true"}

Select the **+ New **button to create a new purchase credit memo. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/j3GGUILmHBzCiSdNxgs5k_screenshot-2023-03-01-at-20235-pm.png" size="78" width="1440" height="195" caption="Click Copy Document" position="center" showCaption="true"}
:::

:::WorkflowBlockItem
### Manually Create the Document Lines

Next, manually enter the Vendor Name, line items, and Vendor Credit No. in the credit memo. 

![](https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/PPZARfD_xqpxLvVCbc2lB_screenshot-2023-03-01-at-35243-pm.png "Enter Details")
:::

::::WorkflowBlockItem
### Add Applies-to Doc. No. 

Add the **Applies-to Do. No.** to ensure the credit memo will be applied to the correct invoice. The invoice must be marked as **Open** to apply the credit memo and pay the invoice with a reduced amount due.  

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/DqL6ERfmkD2Kro4UrdDZq_screenshot-2023-03-01-at-35708-pm.png" size="80" width="1914" height="1332" caption="Add Applies-to Do. No. " position="center" showCaption="true"}

:::hint{type="info"}
**NOTE:** If the **Applies-to Do. No.** is incorrect or the referenced invoice is already closed, you must change it to the **Open** invoice you intend to reduce before posting the Credit Memo.
:::
::::

:::WorkflowBlockItem
### Post the Credit Memo

After confirming all details, post the document by selecting **Post. **

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/iC-M9YwwWazTiAJYeH2Jb_screenshot-2023-03-01-at-35339-pm.png" size="80" width="2316" height="392" caption="Select Post" position="center" showCaption="true"}
:::

:::WorkflowBlockItem
### Confirm the Reduced Amount

On the Posted Purchase Invoice page, locate the invoice on which you applied the credit memo. On this page, you can confirm that the amount has been successfully reduced before attempting to pay the invoice. 

::Image[]{src="https://api.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/fSJ9yJlQX_gh0qZFXVT_i_screenshot-2023-03-01-at-35416-pm.png" size="80" width="2232" height="76" caption="Confirm the Reduced Amount" position="center" showCaption="true"}
:::

:::WorkflowBlockItem
### Pay Reduced Invoices(s)

Pay the invoice(s) as you would normally.

::Image[]{src="https://app.archbee.com/api/optimize/MM6nC_bKbIkwCRqiFZqEu/SBLgq410ZZn6xFeNjBQpc_screenshot-2023-09-28-at-42656-pm.png" size="80" width="1530" height="196" position="center" caption="Pay Reduced Bills" showCaption="true"}
:::
:::::

***

## Limitations

Credit memos cannot be applied at the Payment Journal level. They must be applied to an existing document before attempting a payment through the plugin. Failure to apply the credit memo beforehand will cause the plugin to ignore the credit and remit the full invoice amount.

Credit memos must be less than or equal to the remaining amount due on the invoice to be successfully applied.