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Level 1

recording a supplier refund

I bought an item from a supplier I entered the invoice and my payment but then had to return 1 item how do I record the refund  I followed the online instructions but then was unable to reconcile my accounts as they were out the amount for the refund.

QuickBooks Team
QuickBooks Team

recording a supplier refund

Let me guide you on how to record a supplier refund in QuickBooks Online (QBO), insideoutmandy.


If the refund is for returned stock items, you'll need to create a supplier credit. Then, enter the supplier refund cheque in the Deposits screen. Let me show you how:

  1. Click the New plus icon. 
  2. Select Bank Deposit.
  3. In the Add funds to this deposit section, enter the details in the following fields:
    • Received from: Select or enter the supplier name.
    • Account: Select the Creditors (Accounts Payable)
    • Amount: Enter the cheque amount.
  4. Press Save and close.

Once done, link the deposit to the supplier credit by following the steps below: 

  1. Click the New plus icon
  2. Select Expense or Cheque.
  3. In the Payee drop-down, choose the supplier name.
  4. In the Add to Expense or Add to Cheque section, select Add for the outstanding supplier credit and deposit.
  5. Press Save and close.

If you recorded cheques for Suppliers in the Cheques screen and didn't enter bills, it will result in negative balances for your Suppliers. To resolve this, follow the steps and details in the How do I handle supplier credits and refunds? article. Then, go to Why do I have supplier credits? section.


Once done, try reconciling your accounts again. Feel free to visit our Expenses and suppliers page for more insights about managing your expenses, paying bills, and stocks.


I'd like to know how you get on after trying the steps, as I want to ensure this is resolved for you. Just reply to this post and I'll get back to you. You have a good one. 

Level 1

recording a supplier refund


Thanks for the advice but I had already tried that. Then when I try to reconcile I can see by original payment (paid out) that is taken by suppliers before they post item out. The items did not arrive hence the refund. I then have the deposit entry (Paid in) and another entry  (paid out) that was from linking the deposit to the supplier credit. Please re advise.

Regards Mandy

QuickBooks Team
QuickBooks Team

recording a supplier refund

Thanks for coming back and provided us in-depth details of your refund concern, insideoutmandy.


Since you already make a bank deposit to record the refund, let's create a bill payment to link the refund. This process will offset the vendor's balance and links the deposit given back by your supplier.

  1. At the top menu, click Create menu (+) and select Pay Bills.
  2. Click the Filter button, and choose the supplier in the Payee field.
  3. Click Apply.
  4. Put a checkmark on the transaction with the refund amount.
  5. The amounts in the Credit Applied the Open Balance fields should be the same.
  6. The amount in the Payment field should be zero (0).
  7. Click Save and close.

For more details about this one, see Enter and pay bills article.  Feel free to visit our Supplier credits page for more insights about creating and managing credits from your suppliers. 


I'll be right here to continue helping if you have any other concerns or questions about QuickBooks. Assistance is just a post away. Take care always.

Level 1

recording a supplier refund

I'm so sorry to keep on at this but I can't solve my problem

Transaction recorded for this supplier show

11.11.20 bill entered into quickbooks £70

12.11.20 this bill was paid £70 

The items were never received so the supplier issued a refund of £70

24.11.20 I followed the refund instructions from yourself and quickbooks

24.11.20 Deposit £70

24.11.20 Linked bill payment £70 as per instructions Looking at the above it shows an overall balance of £70 being paid to the suppliers and that's why my reconciliation doesn't balance.


QuickBooks Team

recording a supplier refund

Hi there, @insideoutmandy.


To make sure that you apply the credit correctly to the right deposit or payment, let's review the records in the Supplier's Transaction List.


Here's how:

  1. From there, there should be three transactions made for the customer, the Bill PaymentSupplier Credit, and Bill.
  2. Open the Supplier Credit, and then click on the payment link made, select the date[24/11/2020].
  3. Check if both the Supplier Credit and the Bill was ticked and applied in the Bill Payment window. The amount should be zero.
    2.PNG 3.PNG

However, if you have done these steps and the issue persists, I'd recommend contacting our Technical Support Team to investigate this further. They have tools to see what was causing this hurdle that unbalanced amount on the supplier's refund.


Here's how:

  1. Click the Help icon.
  2. Type and then enter Contact Us.
  3. Choose Live Chat.

Please know that their best schedule starts from 8:00 AM to 8:00 PM, Monday to Friday. Also, you can contact them through this link: Contact Us.


For future references and other ways to record and manage supplier's expenses, you can check on this link to find more video tutorials: Tutorials for Expenses and Suppliers. You can also click the Training and Topics button to navigate and see helpful articles for Banking, Sales and Customers and more.


If you need further assistance or share your experience, I'd be happy to help. Take care and have a great day ahead, Mandy!

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