How to apply a vendor refund to a customer invoice?

Hi there,

It's important you're able to enter the vendor refund. QB Online is designed to make that process easy and I'll be happy to steer you in the right direction. 

Here are the steps you'll need to follow: 

Step 1: Enter a supplier credit

This makes sure the credit hits the expense account you use for this supplier.

1. Select + New.
2. Select Supplier credit or Receive supplier credit.
3. In the Supplier dropdown, select your supplier.
4. Depending on how you record purchases with this supplier, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting a credit for.
5. Select Save and close.

Step 2: Deposit the money you got from the refund

1. Select + New.
2. Select Bank Deposit.
3. In the Account drop-down menu, select the account where you got the refund.
4. In the Add funds to this deposit section, fill out the following fields.
   • Received from: Select the vendor who gave you the refund.
   • Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
   • Payment method: Enter the method your vendor used to refund you.
   • Amount: Enter the amount of your refund.
5. Select Save and close.

Step 3: Use Pay Bills to connect the bank deposit to the supplier credit

Even though you aren’t paying a bill, this is the right thing to do. This last step is to keep your supplier expenses accurate.

1. Select + New.
2. Select Pay Bills.
3. Select the bank deposit you just created. You’ll see the amount of the supplier credit in the Credit Applied field. The Total payment should be $0.00.
4. Select Save and close.

Before trying this out, I recommend reaching out to your accountant to avoid any discrepancies in the future. In the meantime, check out this helpful article here. The article shows how to record a refund a security deposit. 

In case you have other questions, feel free to contact our support team using this link here.