A credit memo does nothing until the credit actually lands somewhere — a smaller check, a reduced bill, a case of replacement product. Getting a vendor to approve the memo is the hard part; applying it should be the easy part, and in ShelfSpace it mostly happens on its own. But how it applies depends on how you pay your vendors. This post covers all three routes an approved credit can take: the automatic path when you pay through ShelfSpace, the hand-off path when your bills live in another system, and the case where a vendor squares up with product instead of money.
The integrated path — you pay through ShelfSpace
If you pay vendors through ShelfSpace AP, applying an approved credit is essentially free of effort. The credit simply shows up as an available deduction the next time you go to pay that vendor, and you point it at wherever it belongs:
- Apply to a payment. When you cut a check or send a bank payment to the vendor, the approved credit is offered as a deduction — the payment goes out net of the credit.
- Apply to an open purchase order. If there's an open PO for that vendor, the credit can come off it, reducing what you owe on the next delivery.
- Net it on the settlement. For a consignment return, the credit nets automatically against the vendor's weekly settlement — no separate step at all.
You approved it, the vendor approved it — so the deduction is already waiting for you at payment time. No re-keying, no cross-referencing a spreadsheet.
The whole point of the integrated path is that the credit and the payment live in the same system, so the platform can line them up for you. You confirm; it deducts.
The external path — your bills live elsewhere
Plenty of retailers run their AP in QuickBooks or another system, and that's fine — the credit still gets applied, you just take the deduction on your side. The control for this lives in your credit recovery Settings, under "What to do with approved credit memos." Set it to the external path and ShelfSpace hands you each approved memo to pass to your accounting team. When they take the deduction in your own AP, you come back and mark the memo applied, so ShelfSpace's records match your books.
Two paths, one outcome
The mechanics differ, but the destination is identical: the vendor gets paid less by exactly the approved credit. The setting just tells ShelfSpace whether to do the deduction for you or to track one you take yourself. Where that setting lives, alongside every other configuration switch, is covered in configuring your credit recovery settings.
Settling in product instead of cash
Not every credit comes off a payment. Sometimes a vendor would rather make it right with product — a replacement case for the defective units, a few extra on the next drop. When that's the deal, you mark the credit memo Fulfilled. That records that the vendor is squaring up in product, closes the credit so it isn't also deducted from a payment, and keeps everyone's books honest.
One important nuance: Fulfilled records the agreement, not the delivery. Marking a memo Fulfilled says "we agreed the vendor will make good with product" — it is not proof the product showed up. Confirm the actual receipt the way you'd confirm any other delivery; the Fulfilled status is about closing the credit, not verifying the goods.
What to remember
- Paying through ShelfSpace? Approved credits deduct themselves at payment time — on a payment, a PO, or a consignment settlement.
- Paying elsewhere? Set the external option, share the memo, and mark it applied once your AP takes the deduction.
- Vendor squaring up in product? Mark it Fulfilled — and confirm receipt separately.
- However it's applied, the finish line is the same: you pay the vendor less by the approved amount.
Approved credit that never gets applied is just a nice-looking PDF. ShelfSpace closes that gap — automatically where it can, cleanly where it can't. If you want to see approved credits flow straight through to smaller vendor payments, start with a free evaluation and we'll show you the whole loop on your own numbers.