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Clio1616
October 25, 2024
Solved

Invoice to a vendor is paid twice by mistake. Vendor issued a credit note and paid the amount back. How it should be recorded in Quickbooks online?

  • October 25, 2024
  • 2 replies
  • 0 views
All the transactions were done by bank transfers. So how to record:
- wrong second payment to a vendor
- received Credit note
- received paid back amount
And how how to connect both money transactions with bank feed records?
Best answer by FaithA

I appreciate your proactiveness in getting this solved, Clio. It can definitely get a bit tricky navigating these entries, but I've got you covered.

 

I'd like to focus on the second situation that you've provided while relating it to the original. Let's walk through the step-by-step process for handling the advanced payment and refund.

First things first, assuming you haven't recorded the advanced payment to the hotel yet, follow these steps:

 

  1. Go to the +New icon and select Expense.
  2. Choose the Vendor (Hotel) and enter the total advanced payment amount (360.60 EUR).
  3. For Category, select Accounts Payable (A/P).
  4. Make sure the date corresponds to when the payment was made. 
  5. Select Save.

 

Secondly, create a Bill for the total invoice amount:

 

  1. Go to the +New icon and select Bill.
  2. Enter the Vendor (Hotel) and the invoiced amount (for example, you paid 200.00 EUR).
  3. Pick the appropriate expense category. I encourage you to reach out to your accountant for accuracy.
  4. Enter the billing date when you received the final invoice.
  5. Click Save once everything is good. 

 

Next, link the advanced payment to the Bill:

 

  1. Go to the +New icon and select Pay Bills.
  2. Find the Vendor (Hotel) in the list.
  3. Find the advanced payment transaction(360.60 EUR) and the invoice (200.00 EUR) listed. Apply the 200.00 EUR payment to the bill.
  4. This will leave a credit balance of 160.60 EUR in Accounts Payable.
  5. Select Save when done.

 

After this, record the refund as a Bank Deposit:

 

  1. Go to the +New icon and select Bank Deposit.
  2. Choose the bank account where the refund was received.
  3. For Category, use Accounts Payable (A/P) and enter the refund amount (160.60 EUR), and set the Received from field as the hotel.
  4. Lastly, click on Save.

 

Finally, apply the Bank Deposit to the Credit Balance to clear it out:

 

  1. Go to the +New icon and select Pay Bills again.
  2. Select the Vendor (Hotel).
  3. Apply the Bank Deposit (refund) to the remaining credit balance, ensuring it zeros out.

 

These steps are crucial for maintaining accurate financial records. Step 1 acknowledges the initial payment in your balance sheet. Step 2 records the expense correctly within the appropriate category. Step 3 reduces the payable amount and acknowledges any credit due. Step 4 ensures the refund is recorded and linked to Accounts Payable, effectively closing the credit balance and preventing discrepancies.

 

In the future, you won't have a problem categorising the transactions correctly, and reconciling them to ensure accuracy.

 

But as always, please feel welcome to return to this thread again if you have more questions. You can tag me anytime or our Community experts will be there in a heartbeat. You got this, Clio!

2 replies

R
RogelioL
October 25, 2024

Recording a vendor credit can be challenging, Clio. Rest assured, I'm here to help you record these transactions accurately

Since your situation involves duplicate vendor payment, a credit note, and a refund, here's a structured way to handle each step, including linking the bank transactions.

Step 1. Record the Duplicate Payment: 

  1. Enter the vendor Bill as usual for the initial payment. 
  2. Record the second, mistaken payment by creating an Expense or Check transaction for the vendor, making sure it links to your Accounts Payable account. This keeps it as a payable entry on your balance sheet,  

 

Step 2. Record the Credit Note from the Vendor: 

  1. Go to the +New icon, then select Suppliers Credit to enter the credit note details. 
  2. Make sure to select the same Accounts Payable account and vendor that you used for the duplicate payment. 

 

Step 3. Record the Refund from the Vendor: 

  1. Click the +New icon, then choose Bank Deposit and record the amount refunded by the vendor. 
  2. For the account, choose Accounts Payable, and make sure it's assigned to the correct vendor. 

 

Step 4. Link Transactions and Reconcile Bank Feed: 

  1. Click the +New icon, then select Pay Bills and select the vendor. 
  2. Apply the Vendor Credit against the duplicate payments to offset it. 
  3. Then, apply the Bank Deposit (the refund) to close out any remaining balance. 

 

When reviewing your bank feed, you'll see both the duplicate payment and the vendor refund. These should be linked to the recorded transactions, so you can categorise them correctly and keep your reconciliation accurate. 

 

If you have further questions about recording these transactions, please don't hesitate to ask. Keep safe, 

C
Clio1616Author
October 25, 2024

Thank you for the reply, RogelioL.
I tried to follow the procedure you proposed, but have stuck on Step 2.
When I try to save Supplier Credit, I get the message: You can't use an Accounts Payable account on the detail portion of a Supplier Credit.

What am I doing wrong?

 
E
Erika_K
October 25, 2024

Your efforts in performing the suggested resolution is valued, Clio. I'll be here to ensure you'll be able to save the supplier credit successfully. Let me share some information first to provide context and help you understand the process better. 

 

QuickBooks Online (QBO) restricts the direct use of an Accounts Payable (A/P) account in a Supplier Credit transaction. The reason for this is A/P is specifically designed to monitor unpaid bills or invoices you're obligated to pay. On the other hand, a Supplier Credit transaction represents money you owe, which can be applied to reduce the amount you owe on future invoices or bills from the same vendor. These two functions serve different purposes in tracking your financial obligations.
 

In line with situation, you'll need to use the same account as the one you utilized when you recorded the associated bill. I'll add an image for visual references.  
 


Finally, you can refer to these articles for insights on pulling up financial data with your supplier totals and handling any prior balance you need to pay:

 


Come back to this post if you have more questions about processing vendor-related topics, Clio. I'll be here to ensure you can get help you deserve. Whether you're dealing with complex supplier transactions, managing multiple suppliers, trying to optimize your account payable process, don't hesitate to share them in the comments section below.

F
FaithAAnswer
November 14, 2024

I appreciate your proactiveness in getting this solved, Clio. It can definitely get a bit tricky navigating these entries, but I've got you covered.

 

I'd like to focus on the second situation that you've provided while relating it to the original. Let's walk through the step-by-step process for handling the advanced payment and refund.

First things first, assuming you haven't recorded the advanced payment to the hotel yet, follow these steps:

 

  1. Go to the +New icon and select Expense.
  2. Choose the Vendor (Hotel) and enter the total advanced payment amount (360.60 EUR).
  3. For Category, select Accounts Payable (A/P).
  4. Make sure the date corresponds to when the payment was made. 
  5. Select Save.

 

Secondly, create a Bill for the total invoice amount:

 

  1. Go to the +New icon and select Bill.
  2. Enter the Vendor (Hotel) and the invoiced amount (for example, you paid 200.00 EUR).
  3. Pick the appropriate expense category. I encourage you to reach out to your accountant for accuracy.
  4. Enter the billing date when you received the final invoice.
  5. Click Save once everything is good. 

 

Next, link the advanced payment to the Bill:

 

  1. Go to the +New icon and select Pay Bills.
  2. Find the Vendor (Hotel) in the list.
  3. Find the advanced payment transaction(360.60 EUR) and the invoice (200.00 EUR) listed. Apply the 200.00 EUR payment to the bill.
  4. This will leave a credit balance of 160.60 EUR in Accounts Payable.
  5. Select Save when done.

 

After this, record the refund as a Bank Deposit:

 

  1. Go to the +New icon and select Bank Deposit.
  2. Choose the bank account where the refund was received.
  3. For Category, use Accounts Payable (A/P) and enter the refund amount (160.60 EUR), and set the Received from field as the hotel.
  4. Lastly, click on Save.

 

Finally, apply the Bank Deposit to the Credit Balance to clear it out:

 

  1. Go to the +New icon and select Pay Bills again.
  2. Select the Vendor (Hotel).
  3. Apply the Bank Deposit (refund) to the remaining credit balance, ensuring it zeros out.

 

These steps are crucial for maintaining accurate financial records. Step 1 acknowledges the initial payment in your balance sheet. Step 2 records the expense correctly within the appropriate category. Step 3 reduces the payable amount and acknowledges any credit due. Step 4 ensures the refund is recorded and linked to Accounts Payable, effectively closing the credit balance and preventing discrepancies.

 

In the future, you won't have a problem categorising the transactions correctly, and reconciling them to ensure accuracy.

 

But as always, please feel welcome to return to this thread again if you have more questions. You can tag me anytime or our Community experts will be there in a heartbeat. You got this, Clio!

    C
    Clio1616Author
    November 14, 2024

    Dear FaithA,

    Thank you.
    This worked perfectly!
    Can you please check the initial question with Credit note involved.
    I still couldn't manage to resolve that problem.
    The similar step by step precise explanation would be much appreciated from your side.


    C
    ChristineJoieR
    November 14, 2024

    You’ve come to the right place for assistance with your reporting needs, Clio. I'm eager to guide you and resolve the credit note concern to ensure everything goes smoothly.

     

    Since the vendor overpaid you, you need to record this as supplier credit and then apply this to their future bills. This is the perfect way to close the vendor credit.

     

    Here's how:

     

    1. First, click on + New and then select Supplier credit.
    2. In the Supplier dropdown, choose your supplier.
    3. Depending on how you manage purchases with this supplier, you’ll need to fill in either the Category or Item details.
    4. Make sure to select Save and Close when you finish.

     

    Afterward, you should create a bank deposit and record the amount in the Accounts Payable category.

     

    Here's how:

     

    1. Start by selecting + New, then go for Bank deposit.
    2. In the Account dropdown, choose the account that got the refund. In the Add funds to this deposit area.
    3. For Received from, select the supplier who refunded you.
    4. In the Account section, pick Accounts Payable to connect the refund to the supplier credit.
    5. For the Payment method, type in how the supplier refunded you. Enter the refund amount and click Save and Close.

     

    After that, let's use the Pay Bills feature to connect the bank deposit with the supplier credit.

     

    1. Press the + New and click the Pay bills.
    2. Pick the bank deposit you just made. You’ll find the supplier credit amount listed in the Credit Applied area. The Total payment should read $0.00.
    3. Choose Save and Close.

     

    Once done, you can pair the bank transaction with the manually entered bank deposit using the Find Match tool in QuickBooks Online.

     

    Additionally, you can check out these articles for tips on how to gather financial data with your supplier totals and manage any outstanding balances you need to settle:

     

     

    Come back anytime if you have more questions about vendor transactions, Clio. I’m here to make sure you get the assistance you deserve. I'll reply to you in no time.

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