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RazorpayX - Vendor Payments

When you purchase goods or avail services from a vendor, it is usually on credit. The vendor sends you an invoice and expects payments as per the agreed payment terms. You make the payment after deducting TDS, if any.

The Vendor Payments App allows you to automate the process of making these payments to your vendors in three simple steps:

  1. Upload an invoice on the RazorpayX Dashboard.
  2. Add vendor details.
  3. Make the payment as per your business requirements.

Note:
Currently, this feature is not available on test mode.

How it Works🔗

Watch the below video to understand how vendor payments work.

  1. Your vendors send you an invoice that you have to pay.
  2. Upload the invoice on the RazorpayX Dashboard. The invoice details are auto-read and uploaded using our OCR technology.
  3. Select an existing vendor or create a new vendor.
    • The vendor is the person or entity to which the invoice payment is to be made.
  4. Select a fund account for the vendor or create a new fund account.
    • These are the account details (bank account or UPI ID) to which the amount is transferred.
  5. Review the Invoice Details such as due date, TDS category and Amount to Vendor.
  6. You can either:
    • Save the invoice and pay it at a later time. You will be sent reminders as you get closer to the due date.
    • Make the payment immediately.
  7. Once you make the payment, it follows the approval workflow set on your RazorpayX account.

Mark as Paid🔗

You might have uploaded an invoice on the Vendor Payment App, but made the payment offline. In such scenarios, you can mark the invoice as paid via the RazorpayX Dashboard. The invoice is moved to the Paid state without creating a corresponding payout.

When marking an invoice as paid, you have the option to select the external method you chose to pay the invoice (such as bank transfer, cheque or cash). This makes Vendor Payments an end-to-end solution to track all your vendor payments, irrespective of how you choose to make the payment.

Invoices marked as paid are considered for TDS payments. This allows you to calculate and pay the TDS using the Tax Payments App.

Here is a short video on how to mark an invoice Paid.

Create Invoice through Email🔗

Apart from uploading invoices, or creating them manually, you can also create invoices using email. Invoices are automatically generated in RazorpayX when you forward an email containing an invoice to a dedicated email address provided to you by Razorpay.

Here is how it works:

  1. Once you sign up for this feature, Razorpay will create a unique email address for you to collect and create invoices.
  2. You can give this email address to your vendors for them to forward invoices.
  3. You can forward invoices received through other email addresses also to this email address.
  4. Razorpay will read data in the email and automatically generate invoice. The invoice is displayed on the Vendor Payments dashboard in the draft state.
  5. You can add relevant details to the draft invoice and create payout or save it as an unpaid invoice.
  6. You can accept or reject or schedule payouts for these invoices via the Vendor Payments dashboard.

Your unique business email address is visible on the Vendor Payments dashboard. You can copy this email address and use it to forward invoices received through other email addresses as shown below:

invoice

Glossary🔗

Payment Terms

The number of days you have to pay the invoice once issued to you. This can vary from Immediate to x number of days.

For example, let us say you are issued an invoice on July 01 and the payment terms for this invoice is 15 days. This means the invoice has to be paid by July 15.

If the invoice is not paid by July 15, it is marked as Overdue on the Dashboard.

Subtotal

The invoice amount without GST, Cess and any other taxes.

Total Amount

The invoice amount with GST, Cess and any other taxes.

For example, if your subtotal is ₹5,000, SGST is ₹200, CGST is ₹200 and Cess is ₹10

CopyTotal amount = Subtotal + SGST + CGST + Cess Total amount = ₹5,000 + ₹200 + ₹200 + ₹10 Total amount = ₹5,410
TDS (Tax Deducted at Source)

As per government mandates, you are required to deduct TDS when making payouts to vendors.

TDS is calculated on the Invoice Subtotal. That is, the invoice amount without GST, Cess and other taxes.

Read More: How tax payment works.

Note:
As per government norms, TDS rates have been reduced by 25% till the end of FY21.

For example, let us say TDS for a vendor is set to 7.5%.

CopySubtotal (Amount without GST, Cess and other taxes.) = ₹5,000 TDS = ₹5,000 x 7.5% TDS = ₹375
Amount to Vendor

This is the amount that is to be paid to the vendor. That is the Payout amount.

For example:

CopyAmount to vendor = Total Amount - TDS Amount to vendor = ₹5,410 - ₹375 Amount to vendor = ₹5,035

FAQs🔗

You can find a list of frequently asked questions (FAQs) about Vendor Payments on our Knowledgebase.

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