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hechoamano
August 25, 2020
Question

Recording a Refund to A Customer / Credit Card Refund

  • August 25, 2020
  • 3 replies
  • 0 views

Hello! I am using QB 2019 Desktop for Mac, and processing credit cards through another system.

 

I have a client who paid for an item, and the credit card payment was settled.

The item was damaged in shipping and I refunded the client the price at a later date.

The refund was removed from a later deposit by my merchant services.

How do I properly record the refund and then include (subtract?) it in the deposit in QB?

 

Thanks in advance!

3 replies

IamjuViel
IamjuViel
August 25, 2020

I've got you covered, @hechoamano.

 

I can definitely guide you in tracking the refund you've given to your customer. 

 

First, let's create a credit memo.

  1. Click the Customers menu.
  2. Choose to Create a Credit Memo.
  3. Select the name of the Customer: Job.
  4. Enter the credit memo details.
  5. Click Save and Close.

Once completed, you can now write a check with the total amount of the refund. Here's how:

  1. Go to Banking.
  2. Select Write Checks.
  3. Choose the Bank account where the check will be posted.
  4. Enter the name of the customer in the Pay to the Order of.
  5. Type in the total amount of the refund or credit.
  6. In the section for Memo, enter the Credit Memo numbers.
  7. Go to the Expenses tab.
  8. Choose Accounts Receivable in the Account column.
  9. Enter the amount of the refund and the name of the customer.
  10. Click Save and Close.

Let's now link the credit memo to the check to avoid getting open credit memos and unapplied refund checks. Here's how:

  1. Go to the Customer menu.
  2. Select Receive Payments.
  3. From the Received from the drop-down, choose the Customer.
  4. Click Discounts And Credits.
  5. In the Available Credits section, mark the check you created, then select Done.
  6. Select Save & Close.  

Visit us here again if you have other questions about processing refunds for your customer. I'm always here to help.

    H
    hechoamanoAuthor
    August 25, 2020

    Thanks for this. However, the client did not receive a check but a credit card refund. The refunded amount was subtracted from (and included in) a subsequent merchant services deposit. Is there a way to include that refund with a deposit of other payments?

    RenjolynC
    RenjolynC
    August 25, 2020

    I appreciate your time getting back here, hechoamano.

     

    You have the option to keep the refund as credit for your client. This way, you can apply the amount as payments on their next invoice. Otherwise, refund it back to their credit card.

     

    If you have not created a credit memo, you can follow these steps:

     

    1. Go to Customers > Create Credit Memos/Refunds.
    2. Enter the credit memo or refund information.
    3. Click Save & Close. 
    4. In the Available Credit prompt, you can select Retain as an available credit, Give a refund, or Apply to an invoice. 
    5. Click OK.

    Please see this sample screenshot for reference:

     

     

    If you select the Give a refund option, you can select the credit card from the Issue this refund via drop-down menu. Here's a sample screenshot:

     

     

    I'm also adding this article for more details about creating customer refunds: Record a credit memo or refund in QuickBooks Desktop for Mac.

     

    Please let me know if you have any additional questions about the refund process. I'm here to help you some more. 

    J
    joemjr2
    March 14, 2022

    Unfortunately, Quickbooks does not have a built-in "normal" / "correct" way to offset a customer refund from a deposit.  It's unfortunate, since it's a very common scenario with credit card processing, ebay, etc.  That being said, here's what I've found is the easiest way to do it, which makes your QB deposits match your bank statements.

    1) Create a temporary "clearing" account that will temporarily hold the deposit.  I call it "Misc. Clearing".  Make sure the account is of type "Bank", or it won't let you choose it in the next step.

     

    2) Create a credit memo, then issue a refund "check" from the "Misc. Clearing" account.

     

    3) Do "Record Deposits" in Quickbooks.  Select all of the sales receipts / payments for the normal sales that went into the bank deposit.  Manually add an extra line at the end of the deposit.  In the "Account" column, choose "Misc. Clearing".  For the amount, enter the amount of the refund as a negative amount.  The deposit total should now match the bank deposit amount.  Save the deposit.

     

    Now, if you look at the "Misc. Clearing" account, it should have a negative entry from when you recorded the refund, then an offsetting positive entry from when you recorded deposit, leaving the account with a zero balance.

     

    It would be REALLY nice if when you recorded a deposit, on the screen where you select payments, if it would also allow you to select any open credit memos to be subtracted.  I've been wishing for this feature for the past 20 years or so, but alas, we are forced to do stupid workarounds like this.  Sigh...

    K
    Kate1958
    March 27, 2023

    A customer paid for an invoice with a credit card.The credit card payment has been processed thru my Shopify account. I need to do a credit card refund for one of the items on the invoice. Shopify sends me a report each day with all of the transactions including the refund.How do I record this in Quick Books Online so that the refund shows on the customer's account and it is backed out of the credit card deposit?

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