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M
markfleming
August 22, 2022
Question

Credit Memo is not being properly applied

  • August 22, 2022
  • 2 replies
  • 0 views

I am having an issue trying to apply a credit memo I have created for a bad debt.  I have done this before without the problem I am experiencing today.

 

I have the credit memo created, and I am trying to apply it, following the steps from Intuit below:

 

  • Step 5: Apply the credit memo to the invoice

    • Select + New.
    • Under Customers, select Receive payment.
    • From the Customer ▼ dropdown, select the appropriate customer.
    • From the Outstanding Transactions section, select the invoice.
    • From the Credits section, select the credit memo.
    • Select Save and Close.
    • The uncollectible receivable now appears on your Profit and Loss report under the Bad Debts expense account.

 

(These are from this help page.)

 

However, after completing the above steps, when I go back to view it after saving, I see that it popped the amount of the credit memo into the "Amount Received" field at the top and applied tht amount it to "Undeposited Funds."  So I deleted the transaction and am trying to figure out what is going wrong.  I've done this in the past, and when I go back to look at the application of a credit memo I've done in the past, it did it properly without filling in the "Amount Received" field.

 

How do I make this work properly?

2 replies

M
markflemingAuthor
August 22, 2022

I looked at another help page, and it explicitly says: "Leave the Payment method, Reference no, Deposit to, and Amount received fields blank."  That's the field that is auto-filled in after I save it.  Seems like a buy.

 

  1. Select + New.
  2. Select Receive payment.
  3. In the Customer dropdown, select the customer.
  4. In the Outstanding Transactions section, select the open invoice you want to apply the credit memo to.
  5. In the Credits section, select the credit memos you want to apply.
  6. For the open invoice in the Payment column, enter how much of the credit you want to apply.
  7. Leave the Payment method, Reference no, Deposit to, and Amount received fields blank.
  8. Fill out the rest of the form, including the Payment date.
  9. Make sure the total is correct after applying the credit memo.
  10. When you're done, select Save and close.
G
Giovann_G
August 22, 2022

Thanks for reaching out to us, Mark.

 

You're on the right track. I'll help you in applying the credit memo to the invoice.

 

When the Automatically apply credit feature is enabled, the credit memo you created will be applied to the customer's open invoices or future invoices. Let's ensure it's turned off before creating a credit memo for the bad debts.

 

Here's how:

 

  1. Go to the Gear icon.
  2. Select Account and settings.
  3. Click the Advanced tab.
  4. Go to the Automation section and toggle the radio button to off if the Automatically apply credit is enabled.
  5. Once done, hit Save and then Done.

 

After that, locate and delete the credit memo for the bad debts. Then, recreate and apply it to the appropriate invoice.

 

Please follow steps 4 and 5 in this article to guide you through the process: Write off bad debt in QuickBooks Online.

 

If you want to run and personalize your report to show only the information you need, you can read this resource for future reference: Customize reports in QuickBooks Online.

 

You're welcome to post again if you need anything else. We're available to help you.

M
markflemingAuthor
August 22, 2022

The setting is off.  And the steps I have done are exactly Steps 4 & 5.  So that's not the issue.

M
Maybelle_S
August 22, 2022

Thanks for getting back to us, @markfleming.

 

Usually, the credit memo will show under Undeposited Funds (UF) when the item of that credit is linked to it. 

 

Undeposited Funds hold money until you are ready to deposit them. It serves as the default Deposit To account when you receive payments, uses a payment item on an invoice, or enter a sales receipt.

 

To clear the amounts, you have to create a deposit transaction:

 

  1. Go to the +New button.
  2. Under Other, select Bank deposit.
  3. From the Account drop-down arrow, choose the account you want to put the money into.
  4. Put a checkmark on the boxes for each transaction.
  5. Hit Save and close.

 

Here's an article for more information about recording bank deposits: Record and make bank deposits in QuickBooks Online.

 

For more details about undeposited funds in QBO, check out this guide here: Deposit payments into the Undeposited Funds account in QuickBooks Online.

 

Moreover, feel free to visit these helpful resources that can help you along the way in managing payments and other transactions in QBO: 

 

 

If you have any other questions about managing your transactions in QBO, please feel free to leave a comment below. I'll get back here as soon as I can to help you again. Take care.

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