How to deal supplier refunds

Hey there, MattB3.

I'd be glad to help you deal with your supplier's refunds without involving the accounts payable in QuickBooks Online.

You can record a cheque or an expense transaction and link it to your bank deposit. You can follow the steps below to enter a cheque:

1. Select + New.
2. Under Supplier, select Cheque.
3. Choose the Payee from the drop-down list.
4. Specify the Bank Account where the money will be withdrawn.
5. Complete the cheque fields. (Note: The Memo field is optional. Text you enter in the Memo field appears in the Account history, and on reports that include this cheque).
6. Select the Print or Preview option if you want to print the cheque.
7. Select Save and close or Save and new.

To link the cheque, here's how:

1. Select + New.
2. Select Expense or Cheque. Note: Both Expense and Cheque recognise and record expenses. When you use Cheque, the transaction adds to the list of cheques that you can print.
3. In the Payee drop-down, select the supplier name.
4. Leave the Ref/Cheque no., Payment date, Amount and Memo fields blank.
5. In the Add to Expense or Add to Cheque section, select Add for the outstanding supplier credit and deposit.

You can go through these articles to help guide you in linking the transactions:

• How do I handle supplier credits and refunds?
• What is the difference between bills, cheques, and expenses?

Let me know how the result of this troubleshooting in the comment below. I need to make sure this is resolved and you're back to running your normal business processing. All the best!

Hi,

I'm afraid this makes no sense to me.

Firstly the supplier is sending me money so why is it an expense?

I have tried to follow the steps listed below, I can get to the following steps:

1. Leave the Ref/Cheque no., Payment date, Amount and Memo fields blank.
2. In the Add to Expense or Add to Cheque section, select Add for the outstanding supplier credit and deposit

There is no add to expense or add to cheque section that I can see. Also I cant leave the payment date field blank or you cannot do anything with the cheque?

Allow me to join the thread, @MattB3.

You can enter a refund depending on how you record your purchases. For now, you can enter a supplier credit and make sure the credit hits the expense account you use for this supplier.

To record a supplier's credit:

1. Go to the New (+) icon, then select Supplier credit or Receive supplier credit under Suppliers.
2. In the Supplier drop-down, select your supplier.
3. Depending on how you record purchases with this supplier, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting a credit for.
4. Tap Save and close.

Then, link the supplier credit when paying the bill.

1. Choose Pay Bills from the New (+) icon.
2. Select the bill/s you want to pay. You’ll see the amount of the supplier credit in the Credit Applied field. The Total payment should be $0.00.
3. Hit Save and close.

On the other hand, you can also deposit the money you got from the refund.

1. Select Bank Deposit from the New (+) icon.
2. In the Account drop-down menu, select the account where you got the refund.
3. In the Add funds to this deposit section, fill out the following fields.
   • Received from: Select the vendor who gave you the refund.
   • Account: Select Accounts Payable/Creditors. You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
   • Payment method: Enter the method your vendor used to refund you.
   • Amount: Enter the amount of your refund.
   • For the tax code you would need to select NO VAT
4. Select Save and close.

I also suggest working with a professional account if you need further assistance in handling your transactions accordingly.

For additional reference about handling supplier credits and refunds, read this article.

Get back to me if you have any other questions. I'm a few clicks away to help. Have a good day!

Just to say I'm struggling with the exactly the same issue.  I have followed the 3 steps.

1. Enter a Supplier Credit

2. Enter the Supplier Refund in the Deposit Screen - I have questions.  Why when the original price I paid and the refund I recieved both had VAT accounted for do I get a dialogue box saying that Debtors and Creditors account do not track Vat?

3. Select Expense or Cheque - why?  Why does it suddenly become an expense to me?  I'm finding this extremely confusing.

Could someone please just tell me, simply, the steps to record and account for a refund FROM a supplier.

Hi 9130347289043866!

When you record a Supplier Credit, this makes sure that the credit hits the expense account you use for this supplier. Also, you can set the deposit to No Vat from the Amounts are drop-down. 

In addition, you'll need to create either Expense or Cheque to connect or link the bank deposit to the supplier credit. You'll notice that the amount paid is zero. This keeps your vendor expenses accurate.

Also, you can run reports with supplier totals.

Leave a comment again if you have other clarifications. Take care!