Refunding a customer with a credit note leaves zero "open", but the amount of the credit note "overdue"

Phil_UK · ‎March 23, 2023

A customer paid an invoice, but we then refunded them.

I followed the instructions under "Customer refund if invoice has been paid" on page https://quickbooks.intuit.com/learn-support/en-uk/help-article/customer-refunds-credits/record-custo...

I created the credit note, and then the expenditure to allocate the amount to the Debtors account, and then matched the automatically-downloaded bank transaction to the expenditure. Now the expenditure is showing as "paid" but the credit note shows "unapplied", and whilst the "open" balance is zero (correct), the "Overdue" balance is showing as the amount of the credit note.

How do I clear this so that "Overdue" also shows zero?

Many thanks.

Rea_M · ‎March 24, 2023

I appreciate your immediate response, @Phil_UK.

You're already on the right track and followed the correct article to record a customer refund in QuickBooks Online (QBO). Let's continue the recording process to apply your credit note transaction appropriately.

You can create a credit note if your customer wants to immediately reduce their current open balance or use it as payment for open or future invoice.

Based on the article you've followed, the second transaction (expense/expenditure) records the refund or your money out transaction. You need to continue and create a Receive payment transaction to zero out your customer's balance. Here's how:

Go to + New and select Receive payment.
Add the Customer and select the Payment method and Deposit to.
Balance should be 0 as they will cancel each other out.
Select Save and close.
If you have Online Banking, go to Bookkeeping, select Transactions, then go to Bank transactions and match the record found.

On the other hand, you can use Refund receipts instead in case you've already given the refund money to your customer. You can follow the Refunds for goods or services that didn't satisfy the customer section in this article: Record a customer refund or supplier refund in QuickBooks Online. Before doing so, make sure to delete or void the credit note and expenditure transactions.

Once everything is all set, you may also want to check out one of our Help pages as your guide in managing your company's income and customers in QBO: Sales and customers help for QuickBooks Online. It includes topics about sales transactions, processing payments, and customizing forms, to name a few.

I'm all ears if you have other concerns about managing refunds and customer transactions in QBO. You can drop a comment below, and I'll gladly help. Take care always, @Phil_UK.

View solution in original post

FateCandylaneT · ‎March 23, 2023

I appreciate you visiting the Community Space, Phil_UK.

Since you've mentioned these transactions are matched, this usually clears out or shows the linked credit note as zero. For us to provide you with the steps in sorting out your issue, can you please share a screenshot of what's happening on your end? It will help us identify whether these transactions are accurately entered and matched.

Any additional information is much appreciated, as this will help us verify I've got the proper workaround for you.

Feel free to add a reply below. We'll be right here, willing to help. Keep safe.

Phil_UK · ‎March 23, 2023

Here's a screenshot, with the customer's details removed.

What seems odd with the instructions I followed is that I'm creating a credit note, then I'm creating a transaction that acts on the Debtors account (the "expenditure" item) - the second transaction doesn't seem to directly reference the first, which I think may be why it's not applying the credit note to anything.

Many thanks for your help.

Rea_M · ‎March 24, 2023

I appreciate your immediate response, @Phil_UK.

You're already on the right track and followed the correct article to record a customer refund in QuickBooks Online (QBO). Let's continue the recording process to apply your credit note transaction appropriately.

You can create a credit note if your customer wants to immediately reduce their current open balance or use it as payment for open or future invoice.

Based on the article you've followed, the second transaction (expense/expenditure) records the refund or your money out transaction. You need to continue and create a Receive payment transaction to zero out your customer's balance. Here's how:

Go to + New and select Receive payment.
Add the Customer and select the Payment method and Deposit to.
Balance should be 0 as they will cancel each other out.
Select Save and close.
If you have Online Banking, go to Bookkeeping, select Transactions, then go to Bank transactions and match the record found.

On the other hand, you can use Refund receipts instead in case you've already given the refund money to your customer. You can follow the Refunds for goods or services that didn't satisfy the customer section in this article: Record a customer refund or supplier refund in QuickBooks Online. Before doing so, make sure to delete or void the credit note and expenditure transactions.

Once everything is all set, you may also want to check out one of our Help pages as your guide in managing your company's income and customers in QBO: Sales and customers help for QuickBooks Online. It includes topics about sales transactions, processing payments, and customizing forms, to name a few.

I'm all ears if you have other concerns about managing refunds and customer transactions in QBO. You can drop a comment below, and I'll gladly help. Take care always, @Phil_UK.

Phil_UK · ‎March 24, 2023

Thanks Rea, the "Refund Receipt" option worked great.

I skipped that initially because I was confused by the idea of a refund being a receipt, when it's an outgoing payment, but it's all matched and zeroed now.

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Refunding a customer with a credit note leaves zero "open", but the amount of the credit note "overdue"