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Handle customer refunds in QuickBooks Online

SOLVEDby QuickBooks322Updated 6 days ago

If you need to give your customer's money back, don't sweat it. Here's how to log refunds in QuickBooks Online.

Before you start

If you use Simple Start and got a refund for an expense you paid for, you can put the money in the same account you used for the original expense. This will balance out the expense you paid for with the refund you got.

If you need it, here are some other resources that might help you:

  1. Some customers like getting a credit to lower the cost of their next purchase. If that’s the case, here’s how to handle adjustment notes or delayed credits in QuickBooks Online.
  2. If your customer has paid too much, find out about the 3 ways to handle a customer overpayment in QuickBooks Online.

If you still think a refund is the right way to go, let's get into it!

Recording customer refunds

Step 1: Enter a adjustment note

  1. Select + New and select Adjustment note.
  2. In the Customer field, select the appropriate customer.
  3. Enter the Adjustment Note Date, Amount, GST, and Product/Service (This is the category, product, or service you’re getting a credit for).
    1. Note: If you choose an inventory item, QuickBooks will put it back into inventory. If the item is defective or if you don’t want it added back to inventory, you can make an inventory adjustment.
  4. Select Save and close.

Note: If the customer has overpaid, you don't need the adjustment note as you will already have an unapplied credit that acts as your adjustment note.

Step 2: Make the refund

  1. Select + New and select Expense.
  2. In the Payee field, select or enter the desired customer.
  3. In the Payment account field, select the bank the money is being refunded from.
  4. In the Category field, select the Accounts Receivable.
  5. In the Amount field, enter the amount of the refund.
  6. In the GST field, select the appropriate GST (not inclusive/exclusive of tax).
  7. Select Save.
  8. Next, select + New and select Receive payment.
  9. Add the Customer and select the Payment method and Deposit to.
  10. Balance should be 0 as they will cancel each other out.
  11. Select Save and close.
  12. If you have Online Banking, go to Transactions and match the record found on the Bank transactions (Take me there) page.
  1. Select + New.
  2. Select Refund receipt.
  3. Select the Customer ▼ dropdown, then select the customer you want to refund.
  4. Select the Refund From ▼ dropdown, then select the bank you deposited the payment for the invoice.
  5. Add all products or services the customer returned in the Product/Service column.
  6. Make sure to fill the Service Date, Quantity, Rate, Amount, GST, and other fields accordingly, then select Save and close.

Credit cards refunds have a few requirements:

  • Credit card refunds can only go back to the original card used for the purchase. You may need to contact your customer to get this info.
  • You can refund up to the amount of the original sale, but not more.
  • You can only issue credit card refunds within 90 days of the sale.
  1. Select + New.
  2. Select Refund receipt.
  3. Select the customer you want to refund from the Customer ▼ dropdown.
  4. Enter the details in the fields using the same info from the original sale. To credit back their credit card, in Payment method, select Credit Card. To credit back their bank account, in Payment method, select Direct Debit.
  5. In Refund From, select the account you wish to refund the customer from.
  6. Select Save and close.

You can now send or print the refund receipt by selecting Print or Preview.

  1. Select + New.
  2. Select Refund receipt.
  3. Select the customer you want to refund from the Customer ▼ dropdown.
  4. Enter the details in the fields using the info from the original sale. For partial refund, only add the items or amount you want to refund.
  5. Select Save and close.

You can now send or print the refund receipt.

We're here to help

If you need additional help or have questions, or you require assistance at any point in this process, our Customer Success team is happy to help.

Sign in to QuickBooks and start a discussion in our QuickBooks Community or join one of our Facebook Groups to connect with other like-minded QuickBooks customers. 

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