Supplier rebates and credit note

[mccoypat94]

Looking for a little help. Recently my business started receiving a rebate for turnover reached with a supplier. paid quarterly in the form of a credit note allocated off my account balance with them. Simple. However they have now began paying the rebate to me by EFT but also issuing a credit note that doesn't come off the statement, naturally they are not giving it twice..
I don't know where or how to handle this in my accounting software. If I enter the credit note on the supplier account it gives an incorrect balance , if I set up a separate account i.e. Supplier X -rebate account and enter the cn there we have a minus balance showing on the system which is also inaccurate.
Raising an invoice against the credit note was something another bookkeeper advised but surely as there's vat on the rebate relieved that's not correct either? I'm totally stumped and I know it shouldn't be so, I have requested supplier to revert back to raising a credit on the account only with no payment but they are refusing.
Any tips? Recording The vat correctly is my main concern obviously

 

[cremeegg]

Raising an invoice against the credit note was something another bookkeeper advised

Thats what you get for asking a bookkeeper. Make a complicated situation more complicated.

Just raise your own reverse credit note. I.e. write the credit note that the supplier previously sent out yourself. Record it as you recorded it when the supplier raised it. It matches the payment, accounts for the VAT, all done.

 

[Andrew Murphy]

If I enter the credit note on the supplier account it gives an incorrect balance , if I set up a separate account i.e. Supplier X -rebate account and enter the cn there we have a minus balance showing on the system which is also inaccurate.

I am not a chartered accountant but here is my take...

As your supplier does not reflect the credit on your purchasing account I'd go with the option of handling turnover rebates using a separate creditor account to keep supplier reconciliations straightforward i.e the 'Supplier X -rebate' account you mention.

The piece you are missing is the EFT bank transaction.

The incorrect creditor balance you refer to after posting the credit note is not inaccurate as your supplier owes you that amount. So when the supplier EFT credit appears in your bank account you will need to post an entry (journal/receipt posting) crediting your 'Supplier X -rebate' creditor account and debiting your bank account. After this the bank account in your accounting software will reconcile, and the supplier creditor account will zero out.

As for VAT, this will be taken care of when you post the credit note. The credit note VAT will be posted to your VAT clearing account, the net rebate to cost of sales, and the corresponding debit to your 'Supplier X -rebate' account.