Refund a deposit in QuickBooks Online

Learn how to refund a deposit entered in QuickBooks Online or processed with QuickBooks Payments.

If a customer paid a deposit for an invoice but later changed their mind and cancelled the transaction, you can return the deposit. You can do this by giving the customer a refund and applying a credit.

The steps vary depending on whether you use QuickBooks Online or QuickBooks Payments to process the deposit.

Not processed with QuickBooks Payments

To refund a deposit in QuickBooks Online, create a credit memo, 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 credit memo

The first step in refunding a deposit is to create a credit memo:

1. Select + New
2. Select Credit memo.
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 credit memo 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. Select Cheque.
3. Select the customer in the Payee field.
4. Under Category details, in Category dropdown, select Accounts Receivable.
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. Select Receive Payment.
3. Select the name of the Customer on your invoice.
4. Make sure that the total credits equal the credit memo and invoice listed under Outstanding Transactions.
5. Select the checkboxes for the credit memo and invoice in the Outstanding Transactions section.
6. Select Save and close.

The payment is recorded and the deposit refund is completed.

Processed with QuickBooks Payments

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

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

Step 1: Create a credit memo

The first step in refunding the deposit is to create a credit memo:

1. Select + New.
2. Select Credit Memo.
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 credit memo 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. Select Refund Receipt.
3. From the Refund method dropdown 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 credit memo to the outstanding invoice.

Step 3: Apply the credit memo

To apply the credit memo you created to the outstanding invoice:

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

The refund is processed.