I received a payment for 3 separate invoices in one payment of £386 from a customer but we already have 1 of the payments, £164. How do i allocate & refund it in QB?

Welcome to the Community space, adrian.

I’d be glad to walk you through the steps on how to record a refund to your customer.

What we need to do is to create an expense and link it to the unapplied credit. Generally, we use credit note to refund invoices that are already been paid. Since the customer has overpaid, we don’t need to create one as the unapplied credit acts as your credit note.

To begin with, you can follow these steps:

1. Go to the + New menu and select Expense.
2. In the Payee field select the desired customer.
3. From the Account field, select the Accounts Receivable account A/R (debtors).
4. In the Amount field, enter the amount of the refund.
5. From Amount are field, select NO VAT (not inclusive/exclusive), then click Save.
6. Next, go to the + New menu and select Receive Payment
7. Add the payee and select the Unapplied credit and the Expense.
8. Balance should be zero as they will cancel each other out
9. Then click Save and Close.

You can also see these articles for more details about the process:

• Record a customer refund or supplier refund in QuickBooks Online
• Handle a customer credit or overpayment in QuickBooks Online 

In case you need to refund your supplier in the future, you can always use visit this link for reference on how to handle the situation: How do I handle supplier credits and refunds?

Keep me posted if you have any follow-up questions about recording refunds or managing your invoices. I’m always around ready to help and back you up. Stay safe and have a great day ahead!