December 17, 2020
Record a customer refund in QuickBooks Online
- December 17, 2020
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Learn how to refund a customer.
If you need to return your customer's money, don't worry. Here's how to record a refund based on various scenarios. This ensures your books are up-to-date.
Customer refund if invoice has been paid
- Select + New and select Credit note.
- In the Customer field, select the appropriate customer.
- Enter the Credit Note Date, Amount, VAT, and Product/Service (This is the category, product, or service you’re getting a credit for).
- Select Save and close.
Note: If the customer has overpaid – you do not need the credit note as you will already have an unapplied credit that acts as your credit note.
- Select + New and select Expense.
- In the Payee field, select or enter the desired customer.
- In the Payment account field, select the bank the money is being refunded from.
- In the Category field, select the Debtors account (Accounts receivable).
- In the Amount field, enter the amount of the refund.
- In the VAT field, select the appropriate VAT (not inclusive/exclusive of tax).
- Select Save.
- Next, go to + New and select Receive payment.
- Add the Customer and choose the Payment method and Deposit to.
- Balance should be 0 as they will cancel each other out.
- Select Save and close.
- If you have Online Banking, go to Bookkeeping, select Transactions, then match the record found on the Bank transactions (Take me there) page.
Supplier refund if bill has been paid
- Select + New and select Supplier credit.
- In the Supplier field, select the appropriate supplier.
- Enter the Payment date, Amount, VAT, and Category (This is the category, product, or service you’re getting a credit for).
- Select Save and close.
Note: If the supplier has been overpaid – you do not need the supplier credit as you will already have an unapplied credit that acts as your supplier credit.
- Select + New and select Bank deposit.
- In the Add funds to this deposit section, enter the following information:
- In the Received From field, select or enter the desired supplier.
- In the Account field, select the Creditors account (Accounts payable).
- In the Amount field, enter the amount of the refund.
- In the VAT field, select the appropriate VAT (not inclusive/exclusive of tax).
- Select Save and close.
- Next, go to + New and select Cheque.
- Add the payee and choose the Supplier Credit and the deposit (from the drawer that appears on the right-hand side) and add them both.
- Balance should be 0 as they will cancel each other out.
- Select Save and close.
- If you have Online Banking, go to Bookkeeping, select Transactions, then match the record found on the Banking page.
Supplier refund on a credit card.
- Select + New and select Credit card credit.
- In the Payee field, select the appropriate supplier.
- From the Bank/Credit account ▼ dropdown, select the credit card where you received the refund to.
- Enter the Payment date, refund Amount, VAT and Category.
Note: The category used here is the original expense account on the original bill. - Select Save and close.
Refund for goods or services that didn't satisfy the customer
You can use refund receipts if a customer asks for a refund for an item or service. If they used a credit card, learn how to refund a credit card payment.
Note: To avoid a double refund, make sure you didn't enter a credit note yet.
- Select + New.
- Select Refund receipt or Give refund.
- Select the Customer ▼ dropdown, then select the customer you want to refund.
- Select the Refund From ▼ dropdown, then select the bank you deposited the payment for the invoice to.
- Add all products or services the customer returned in the Product/Service column.
- Make sure to fill the date, quantity, rate, amount, tax, and other fields accordingly, then select Save and close.
Refund a customer's overpayment or credit
You can record a refund to your customer using Cheque or Expense if:
- They want to redeem their open credits.
- They made a prepayment for an order but cancelled it before receiving the goods or services.
- They want you to reimburse an accidental overpayment.
Using Cheque or Expense to record the refund reduces your bank's balance and offsets the customer's open credit, overpayment or prepayment.
Step 1: Record the refund for your customer
- Select + New.
- Select Expense, Add expense or Cheque.
- Select the customer you want to refund from the Payee ▼ dropdown.
- From the Payment account ▼ dropdown, select the bank account where you deposited the overpayment to.
- On the first line of the Category column, select Accounts Receivable.
- Enter how much you want to refund in the Amount field.
- Fill out the other fields as you see fit, then select Save and close.
Step 2: Link the refund to the customer's credit or overpayment
- Select + New.
- Select Receive payment.
- Select the same customer you used for the cheque or expense when recording the refund.
- Fill out the other fields as you see fit.
- Under the Outstanding Transaction section, select the checkbox for the Expense or Cheque you created when recording the refund.
- Make sure the payment is equal to the open balance, then select Save and close.