customer credits

Thank you for the detailed information about customer credits, KIP72. I'm here to share and explain the different situations you would use for the refund.

When applying for credit in QuickBooks Online, the process depends on the specific situation you are dealing with. If your customer requests a refund and has already paid their invoice, this is applicable when a customer returns a product they've already purchased, and you want to reimburse them the amount.

Meanwhile, if a customer is unsatisfied with a purchase and requests a refund, you have the option to automatically deduct the amount from your bank account and reduce the income account if the customer doesn't return the item. In this case, you would use a Refund Receipt to directly refund the customer and record the transaction without affecting accounts receivable.

On the other hand, you can use the refund for a customer's overpayment or credit if your customer wants to redeem their open credits, accidental overpayment, or wants to get a refund for a prepayment they made for an order and canceled before receiving the goods/services at their location, that's the time they would follow these steps by directly creating a check or expense, then link the credit via receive payment. 

You can refer to this article to learn more about customer refunds and how to record them: Recording a customer refund in QuickBooks Online.

Fill me in if you have other customer refund concerns or questions about QuickBooks. The Community is always ready to assist you further.