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.
To refund a deposit in QuickBooks Online, create a credit 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 credit note
The first step in refunding a deposit is to create a credit note:
- Select + New
- Select Credit note.
- 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 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:
- 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 note and invoice listed under Outstanding Transactions.
- Select the checkboxes for the credit note and invoice in the Outstanding Transactions section.
- Select Save and close.
The payment is recorded and the deposit refund is completed.