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Create and apply credit notes or delayed credits in QuickBooks Online

SOLVEDby QuickBooks32Updated 2 weeks ago

Learn how and when to give a credit note or delayed credit to customers.

Instead of a refund, some customers prefer getting a credit note they can use to reduce the balance on their next invoice.

There are a few ways to handle credit notes in QuickBooks. You can create a credit note to immediately reduce a customer's current balance. Or you can enter a delayed credit so they can use it in the future.

Here's more about the difference and how to apply them to customer transactions.

Note: If your customer simply wants a refund, here's how to return your customer's payment.

In QuickBooks, you can give credit using a credit note or delayed credit. Here are the key differences:

Credit note

  • If your customer wants to immediately reduce their current open balance, use a credit note.
  • Your customer can use their credit note as payment for an invoice. They can use all of their credit notes or a portion of it.
  • You can apply a credit note when recording payment for a customer’s invoice.
  • Credit notes impact sales reports, even if you don't apply them to invoices.

Delayed credit

  • If you want to track a customer's credit for future use, and they don't want it to immediately affect their current open balance, use a delayed credit.
  • Your customer can use their delayed credit to reduce the balance of an invoice.
  • You can add delayed credits to future invoices as a line item.
  • Unlike credit notes, delayed credits don't impact sales reports until you apply them to invoices.

Step 1: Create a delayed credit

  1. Select + New.
  2. Select Delayed credit.
  3. From the Customer dropdown, select the customer's name.
  4. Enter the details, such as the date and the amount. Tip: You can create a custom credit service item so you can quickly add it to delayed credits as a single line item.
  5. When you're done, select Save and close.

This saves the delayed credit. You can choose to apply it the next time you invoice the customer.

Step 2: Apply the delayed credit to an invoice

Keep in mind that adding a delayed credit to an invoice from a prior accounting period will affect that period's balances.

  1. Select + New.
  2. Select Invoice.
  3. In the Customer dropdown, select the customer. This opens a window with all open transactions for the customer, including invoices and delayed credits.
    Note: If you don't see this, select the small arrow next to the invoice Balance Due.
  4. Find the delayed credit and select Add. This adds the credit as a line item to the invoice.
  5. Fill out the rest of the invoice as needed.
  6. When you're done, select Save and close.

Related articles:

Any customisations applied to the Standard template will be picked up by the credit note. To customise a credit note, edit the Standard template according to your needs.

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