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Record a credit memo or refund in QuickBooks Desktop

Create a credit memo or issue a refund check when you need to return an amount to your customer. Check the best workflow that applies to ensure accurate recording in QuickBooks.

Credit memo Refund check
  • Used to return an item that your customer already paid
  • Credit amount can be issued as a refund or retained in your customer account
  • Credit amount can be applied in the next invoice of your customer
  • Helps you to track your sale, payment and return item
  • Used if there's an overpayment and the customer wants to get their money back

Create a credit memo

  1. From the Customers menu, select Create Credit Memos/Refunds.
  2. From the Customer: Job drop-down, select the appropriate Customer.
  3. Enter the returned items in the line item area, then select Save & Close.
  4. On the Available Credit window, choose one of the following:
    • Retain as an available credit - QuickBooks enters a negative amount in your A/R register for the credit memo. You can use this credit as a payment for another transaction.
    • Give a refund - You can issue the refund as cash, a check, or a credit card refund.
    • Apply to an invoice - QuickBooks opens the Apply Credit to Invoices window where you can select an invoice to which you want to apply this credit.
  5. Select OK.

Issue a refund check

Option 1: Through the Receive Payments window

  1. Go to the overpayment transaction (Customers > Receive Payments).
  2. At the lower left of the Receive Payments window, under the Overpayment section, select Refund the amount to the customer.
  3. Select Save & Close.
  4. On the Issue a Refund window, enter all necessary information, then select OK.

Option 2: Through the Write Checks window

  1. Go to the Banking menu, then select Write Checks.
  2. Enter all required information.
    1. From the Pay to the order of drop-down, choose the appropriate Customer.
    2. In the $ field, enter the overpayment amount.
    3. Go to Expenses tab.
    4. From the Account drop-down, choose Accounts Receivable.
    5. Select the Customer: Job drop-down, then choose the Customer.
    6. Select Save & Close.
  3. Link the check to the overpayment.
    1. Go to the Customers menu, then select Receive Payments.
    2. From the Received from drop-down, choose the Customer.
    3. Select Discounts And Credits.
    4. In the Available Credits section, mark the check you created, then select Done.
    5. Select Save & Close.


Create a credit memo

  1. Select Customers, then Create Credit Memos/Refunds.
  2. To create a credit memo, select Create a Credit Memo on the left panel or select the Plus (+) icon at the bottom of the list.
  3. Enter the information for the credit memo/refund, then select Save.
    • To edit, select a credit memo on the list from the left panel, then edit the information.

Note: You can also create sales forms using the Transaction Center.

Write a refund check

When you need to refund to a customer, create a credit memo first, then write a refund check.

  1. Open the credit memo you want to use for the refund.
  2. Select the Refund at the top of the window.
  3. Make sure all the information on the check is correct.
    Note: Use the Accounts Receivable as the account in the detail area to ensure that QuickBooks will credit and refund correctly.
  4. Select OK.

Link the check to the payment

  1. Choose Customers, then select Receive Payments.
  2. Choose your desired customer whom you wrote the refund check. You'll see the amount of the credit included in the Existing Credits field and the refund check at the bottom section of the window.
  3. Select the Apply Existing Credits checkbox.
  4. Enter the amount in the Payment column, if not already entered by QuickBooks, then select OK.
    • If you choose Customers, then Create Credit Memos/Refunds to display the credit memo you just entered and select the Transaction History, you should see the refund check listed in the Transaction History - Credit memo window.

Note: You still need to connect the check to the credit memo in the Receive Payments so QuickBooks can track the transaction correctly.

Although not part of your usual A/R workflow, credit or refund is still one of the most important customer-related transactions in QuickBooks Desktop. To see the complete list of workflows, see Accounts Receivable workflows in QuickBooks Desktop.