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Record a refund for an overpayment or credit in QuickBooks Online

by Intuit• Updated about 2 hours ago

You can refund a customer who has a credit or has overpaid. This involves creating an expense or cheque to record the refund and then linking it to the customer's credit to make sure your accounting is accurate.

What you’ll need

  • The customer's preferred payment method.
  • The bank account you are refunding from.
  • Details of the original overpayment or credit.

Create a refund expense or cheque

First, create an expense or cheque to record the refund transaction.

  1. Select + New or + Create.
  2. Select Expense or Cheque.
  3. From the Payee â–Ľ dropdown, select the customer you want to refund.
  4. From the Payment account â–Ľ dropdown, select the bank account from which you are issuing the refund.
    Note: If you are selecting Cheque, then you will have to select the bank account from the Bank Account â–Ľ dropdown.
  5. In the Category column, select Accounts Receivable (A/R) on the first line.
    Note: If this is your first time adding a payment to accounts receivable, you may have to select + Add new and add Accounts Receivable (A/R) if you do not see it in the dropdown.
  6. In the Amount field, enter the total refund amount.
  7. Fill out any other necessary fields.
  8. Select Save and close.

Link the refund to the customer's credit

Next, link the refund to the specific overpayment or credit on the customer's account. This step is completed automatically if you have automation for applying bill payments turned on.

  1. Select + New or + Create.
  2. Select Receive payment.
  3. From the Customer â–Ľ dropdown, select the same customer.
  4. In the Outstanding Transactions section, select the checkbox for the expense or cheque you created.
    Note: If you have automation to apply bill payments turned on, this step is done for you.
  5. Verify that the payment amount equals the open balance.
  6. Select Save and close.

Results

After you save the payment, QuickBooks links the refund to the credit, clearing the customer's overpayment balance. Your accounts receivable and bank account balances will be updated automatically.

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