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 steps vary depending on whether you use QuickBooks Online or QuickBooks Payments to process the deposit.
In QuickBooks Online
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:
- Select + New
- Select Credit memo.
- Select the name of the Customer on your invoice.
- Enter the total of the invoice, including the deposit in the Amount field.
- 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:
- Select + New.
- Select Cheque.
- Select the customer in the Payee field.
- Under Category details, in Category dropdown, select Accounts Receivable.
- Enter the amount of the deposit received in the Amount field.
- 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:
- Select + New.
- Select Receive Payment.
- Select the name of the Customer on your invoice.
- Make sure that the total credits equal the credit memo and invoice listed under Outstanding Transactions.
- Select the checkboxes for the credit memo and invoice in the Outstanding Transactions section.
- Select Save and close.
The payment is recorded and the deposit refund is completed.
In QuickBooks Payments
To refund a deposit you processed using QuickBooks Payments, create a credit memo, 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:
- Select + New.
- Select Credit Memo.
- Select the name of the Customer on your invoice.
- Verify that the Amount field reflects the open balance of the invoice, less the amount of the deposit.
- 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:
- Select + New.
- Select Refund Receipt.
- From the Refund method dropdown list, select the customer's credit card type.
- Complete the fields on the Refund Receipt, using one product/service item.
- Enter the amount of the deposit received in the Amount field.
- 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:
- Select + New.
- Select Receive Payment.
- Select the name of the Customer on your invoice.
- Verify that the credit memo appears in the Credits section, and that the invoice appears in the Outstanding Transactions section.
- Make sure that the total credits equal the credit memo and invoice listed under Outstanding Transactions.
- Select both of the transactions.
- Select Save and close.
The refund is processed.