I have sent a credit note to a supplier and have physically paid it, how do I match the banking transaction to the credit note

I have another way on how you match your bank transactions with the refund or credit, freya_marsh.

May I know how did you exactly record your credit note transaction? Normally, you can create cheque or expense to record the refund. This directly reduces your bank balance and offsets the customer's open credit, overpayment or prepayment.  To do this, you can follow the steps below: 

1. Select + New.
2. Select Expense, or Cheque.
   Note: Both Expense and Cheque recognise and record expenses. When you use Cheque, the transaction adds to the list of cheques that you can print.
3. Select the customer you want to refund from the Payee ▼ dropdown.
4. From the Payment account ▼ dropdown, select the bank account where you deposited the overpayment to.
5. In the first line of the Category column, select Debtors (Accounts receivable).
6. Enter how much you want to refund in the Amount field.
7. Fill out the other fields as you see fit, then select Save and close.
   Note: If your customer refund is reflected on your automated bank feed, you don’t need to record it manually. Simply use the Add function to add the refund as an expense and categorise it to the Debtors (Accounts receivable) account.

Then, link the refund to the customer's credit or overpayment. Here's how:

1. Select + New.
2. Select Receive payment.
3. Select the same customer you used for the cheque or expense when recording the refund.
4. Fill out the other fields as you see fit.
5. Under the Outstanding Transactions section, select the checkbox for the Expense or Cheque you created when recording the refund.
6. In the Credits section, select the Credit or Overpayment you want to link with the refund in Step 5.
   Note: Customer credits and overpayments may exist in different forms (such as credit notes, deposits or unapplied payments), if they are categorised against a debtor’s type of account – usually the one called Debtors (Accounts receivable). If you cannot see a deposit you entered to reflect a customer’s overpayment among the options in the Credits section of the screen, find this deposit first and ensure it’s categorised against the Debtors (Accounts receivable) account.
7. Make sure the payment is equal to the open balance, then select Save and close. You have successfully linked the customer refund to a credit (overpayment). Any linked credit note will be marked as closed, and a deposit will be marked as paid.

Once done, you'll now be able to match the transactions. However, if you prefer to apply credit notes to customers' balances, check out this article for more detailed steps: Create and Apply Credit Notes or Delayed Credits In QuickBooks Online. Furthermore, after you have reviewed your accounts to make sure they match your statements. I've added this article so you'll be able to start with your reconciliation: Reconcile An Account In QuickBooks Online.

Drop a reply below if you have any concerns with refund or credit transactions. I'll always be right here to help.