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A
al199
October 11, 2022
Question

Refunds and customer balance

  • October 11, 2022
  • 1 reply
  • 0 views

After reading multiple answers about tracking refunds, I am still not clear on the best way to process refunds and ensuring a correct effect on customer balances.

 

Example:

1. create and send invoice for 100$. Customer statement shows 100$ "open".

2. receive payment for invoice, for 100$. Invoice is showing as "Paid", payment is shown as "Closed", customer statement shows a balance of 0$

3. something changes in the work commissioned, so the invoice now is changed, to 80$. The payment status is now "Partial", because only 80$ of it are applied to the invoice. Customer statement shows -20$ "open". In other words, the customer has a credit of 20$.

4. The customer does not want a credit for future use. He wants to be refunded in cash now. So to track this in QBO we click on New>Refund receipt. Total amount refunded is 20$, "Refund successfully issued". However in the customer statement, the payment still shows as "Partial", and the balance is still -20$ "open".

 

It looks like if a new invoice is later generated for this customer, there is still 20$ of this payment that could be applied. Which is not what we want. We have issued a refund for those 20$.

 

It seems to me there should be a way to link the refund to the payment. Creating an adjustment note is not the solution, because that gives a credit for future use. Which is not what he wants.


Other support articles I found mention clicking on "Refund" in the "More" menu in the footer of the invoice, but there is no "Refund" menu item to be found in my test invoices.

 

What should be done in this scenario so that the customer balance goes to 0$?

 

 

 

1 reply

I
IntuitSheila
October 11, 2022

Hello al199,

 

You'll have to create an expense and allocate it to accounts receivable for the money out (refunded amount) and then link them to the invoice to zero out the customer balance. Here's how:

 

Create an expense or cheque for the refund:

 

  1. Click on + New, and select Expense.
  2. Under the Payee, choose the Customer name instead.
  3. Under Category details choose Account Receivable.
  4. Enter the amount to refund the customer.
  5. Click on Save and close.

Once done, go back to the customer's detail and check if the balance is set to zero. If not, click and open the customer's invoice and click on Receive payment, and link together the adjustment note and expense to the invoice. Here's how:

 

  1. Click on + New, and click on Receive payment.
  2. Select the Customer name, go to Outstanding Credits, and tick the box for the invoice, adjustment note, and expense.
  3. Click on Save.

It should zero out the customer balance after. You can check this link to learn more about Record a customer refund in QuickBooks Online.

 

Post again in the Community if you have more questions.

 

A
al199Author
October 11, 2022

Hi,

thank you for the swift reply.

I tried the process, but when creating the expense:

1. if I do not select a GST tax, I get an error message "One or more charge lines do not have a tax code associated with it. Please assign a tax code for those lines."

2. if I select "GST on non capital" (10%) or even "GST-free capital" (0%), I always get the erorr "You cannot track tax on accounts of types Accounts Receivable and Accounts Payable."

 

The correct of course should be "GST on non capital" (10%) , because that is what was in the original invoice. But in any case, it doesn't work.

 

 

 

 

I
IntuitSheila
October 11, 2022

Hi al199,

 

The QuickBooks Online system only allows us to track taxes on income, expenses, and checking accounts. That is why you're getting an error if you're assigning GST on the transaction. You can set the GST to Out of scope and should be able to save the expense. 

 

If you need to assign a tax code to the transaction, I'd recommend checking in with your accountant for more advice or contacting our Customer Care Team. They'll be able to further check the transaction in a secure form.

 

You can contact support through the Help icon in QuickBooks Online or through https://quickbooks.intuit.com/learn-support/en-au/contact

 

Post again in the Community if you have more questions.

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