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kvioland
April 11, 2019
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Help needed with applying customer credit card refund

  • April 11, 2019
  • 2 replies
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A good, long-standing customer paid a $2,000 Invoice in full by credit card, and I recorded the payment. A few days later, they said they had meant to only pay $500 now and $1,500 later and asked to have $1,500 refunded, so I processed the refund.

To record this, I went back to the Invoice and clicked on Refund/Credit, which created a Credit Memo. I changed the amount on the Credit Memo from $2,000 to $1,500, selected “Use credit to give refund”, completed the credit card refund screen, and saved it.

The Credit Memo shows that $1,500 has been refunded.

Neither the Invoice nor the Credit Memo show up in Receive Payments.

I thought the balance due on the Invoice would be $1,500 but it is showing that it is paid in full.

My questions are:

1. What should I have done differently? I don’t see where it shows that the customer still owes us $1,500.

2. When they do pay the $1,500, how do I record and apply the payment?

3. What kind of documentation do I send the customer for their records?

Any specific step-by-step instructions would be most appreciated.

I am using Desktop Pro Plus 2019, Win 10, and credit card processing is not done through QB.

Best answer by

RE: When I try to change the amount of the payment from $2,000 to $500 it is telling me I need to delete the payment from the deposit. I could do that, but then the deposit wouldn't match the bank statement.

 

Here's what you have so far:

- Invoice $2000

- Actual Payment $2000, deposited.

 

And you then the customer requested a refund.

- So, enter a Credit memo for $1500

- and when prompted, a Credit Card Refund for $1500

 

Based on these transactions the customer account balance is now $0

But you want them to owe you $1500.

 

So, do one of two things:

- Either create a new invoice for $1500, exactly mirroring the $1500 credit memo (use the same item or items on it)

- Or delete/void the credit memo, but not the CC Refund.

 

Now the customer balance will be $1500, waiting for payment that you refunded.

2 replies

A
Anonymous
April 11, 2019

A credit card refund functions like a Payment in reverse and will normally show up in Undeposited funds with your other payments, waiting to be deposited.

 

Since the credit memo is "paid" by the refund (the exact mirror image of an invoice being paid by a payment)  neither will appear in receive payments; they complete each other.

 

The only remaining action in this case is to include the refund in the correct batch along with other credit cared payments received, or to "deposit" it by itself if that is what happens in your merchant account.

K
kviolandAuthor
April 11, 2019

Thanks, I appreciate your help.   I entered the deposit as you suggested.

The problem still remains that the invoice shows that it is paid in full.  Is there some other place that would show they still owe us $1,500? 

Right now, all I have to send them is an invoice that's marked paid and a credit memo that's marked refunded.  I don't have anything that shows they owe $1,500.

Even an open balance report shows zero.

And then when I do get the payment, I'm not sure what to do with it since there doesn't seem to be anything that needs paid.

Am I thinking about this wrong? Like maybe it should be a customer loan or something like that?

    M
    MaryGraceS
    April 11, 2019

    Hi there, @kvioland.

     

    I'd be happy to help share additional insight about recording the payment and refund in QuickBooks Desktop.

     

    The following are the scenarios when to use a credit memo in QuickBooks:

    • Used to return an item that your customer already paid
    • Credit amount can be issued as a refund or retained in your customer account
    • Credit amount can be applied in the next invoice of your customer
    • Helps you to track your sale, payment and return item

    In your case, there's an overpayment, and the customer wants to get their money back. To fix this, you can just use a refund check. I'm adding the following article for further reference: Record a credit memo or refund in QuickBooks Desktop.

     

    Since you already issued a refund through the credit memo, you can delete the credit memo. Then, edit the payment and enter the correct amount you receive to change the invoice status to open. 

     

    Here's how: 

    1. From the Customers menu, select Customer Center.
    2. Select the name of the customer.
    3. Double-click the payment.
    4. Change the PAYMENT AMOUNT (500).
    5. Click Save & Close. 

    After that, delete the bank deposit so that it'll not offset the customer payment. Once done, run the Customer QuickReport to see the balance on your invoice. 

     

    Here's how:

    1. Open the invoice.
    2. Select the Reports menu.
    3. Click the QuickReport icon. 

    Please know that I'm just a post away if you have additional questions about this. I'll be happy to help you further. Have a great day ahead. 

      K
      kviolandAuthor
      April 11, 2019

      Thank you for helping, MaryGrace.

      The original $2,000 payment was part of a deposit a few days earlier, which has already been recorded.

      When I try to change the amount of the payment from $2,000 to $500 it is telling me I need to delete the payment from the deposit.   I  could do that, but then the deposit wouldn't match the bank statement.

      Is there another way around this?

      M
      MaryGraceS
      April 11, 2019

      Hi there, @kvioland.

       

      Thanks for getting back to this thread and trying the recommendation I provided in my previous post. 

       

      To make sure I'm on the same page, do you have a merchant account? If so, instead of editing the payment, let's just make sure the Accounts Receivable account is used in the check refund. This way, the deposit still matches your bank statement. 

       

      Here's how to check: 

      1. From the Customers menu, select Customer Center.
      2. Select the name of the customer.
      3. Double-click the check refund.
      4. Go to the Expenses tab and select Accounts Receivable.
      5. Click Save & Close. 

      You may also want to indicate in the Memo section that this check is a refund to the customer's credit card payment. For more details about creating this, see this article right here: Record A Refund In QuickBooks Desktop. 

       

      That should get you back in track. You can always get back to this post or click the Reply button if you need clarifications. I'm also willing to answer your follow-up refund questions. Wishing you well. 

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