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How to refund a deposit and close an invoice

SOLVEDby QuickBooksQuickBooks Online20Updated 1 week ago

If a customer gave you a deposit for an invoice but changed their mind and backed out of the transaction, you can reverse the deposit by giving the customer a refund and applying a credit.

The procedures differ, depending on whether you use QuickBooks Online or QuickBooks Payments to process the deposit, and the following sections provide the steps to use in either.

QuickBooks Online users

To refund a deposit in QuickBooks Online, you must create a adjustment note, create a cheque to refund the deposit, and then record the payment.

The steps in the following sections guide you through this process.

Step 1: Create a Adjustment Note

The first step in refunding a deposit is to create a adjustment note:

  1. Select + New.
  2. Under Customers, select Adjustment Note.
  3. Select the name of the Customer on your invoice.
  4. Enter the total of the invoice, including the deposit in the Amount field.
  5. Select Save and close.

The adjustment note is created. The next step is to issue a cheque to refund the deposit.

Step 2: Create a Cheque to refund the deposit

To create a cheque to refund the deposit:

  1. Select + New.
  2. Under Suppliers, select Cheque.
  3. Select the customer in the Payee field.
  4. Under Category details, select Accounts Receivable from the Category field drop-down list.
  5. Enter the amount of the deposit received in the Amount field.
  6. Select Save and close.

The cheque is created. The last step in the process is to record a payment.

Step 3: Record a Payment

To record the payment:

  1. Select + New.
  2. Under Customers, choose Receive Payment.
  3. Select the name of the Customer on your invoice.
    Total Credits should equal the adjustment note and invoice listed in the Outstanding Transactions section.
  4. Select the checkboxes for the adjustment note and invoice in the Outstanding Transactions section.
  5. Select Save and close.

The payment is recorded and the deposit refund is completed.

QuickBooks Payments users

To refund a deposit you processed using QuickBooks Payments, you must create a adjustment note, refund the customer's credit card, and then apply the adjustment note to the outstanding invoice.

The following sections guide you through the steps to complete this process.

Step 1: Create a Adjustment Note

The first step in refunding the deposit is to create a adjustment note:

  1. Select + New.
  2. Under Customers, select Adjustment Note.
  3. Select the name of the Customer on your invoice.
  4. Verify that the Amount field reflects the open balance of the invoice, less the amount of the deposit.
  5. Select Save and close.

The adjustment note is created. The next step is to refund the amount of the deposit to the customer's credit card.

Step 2: Refund the customer's credit card

The next step is to refund the amount of the deposit to the customer's credit card:

  1. Select + New.
  2.  Under Customers, select Refund Receipt.
  3. From the Refund method drop-down list, select the customer's credit card type.
  4. Complete the fields on the Refund Receipt, using one product/service item.
  5. Enter the amount of the deposit received in the Amount field.
  6. Select Save and Close.

The amount is refunded. The last step in the process is to apply the adjustment note to the outstanding invoice.

Step 3: Apply the adjustment note

To apply the adjustment note you created to the outstanding invoice:

  1. Select + New.
  2. Under Customers, choose Receive Payment.
  3. Select the name of the Customer on your invoice.
  4. Verify that the adjustment note appears in the Credits section, and that the invoice appears in the Outstanding Transactions section.
  5. Make sure that the total credits equal the adjustment note and invoice listed under Outstanding Transactions.
  6. Select both of the transactions.
  7. Select Save and close.

The refund is processed.

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