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solana
Level 2

Refund a customer pre-payment credit balance

Our customers pay us a set amount each month. We post these payments to the Debtors account as a Deposit (with no VAT). Then when we raise an invoice, we apply any deposits to the invoice.

 

A customer with a credit balance has closed their account and I've paid them their balance. We won't be raising any more invoices for them. How can I record this refund in QB so that their account balance becomes zero?

 

Everything I've tried so far (Expense, journal entry) results in the customer's balance just switching from Open to Overdue. 

 

A Refund or a Credit Note aren't appropriate because there is no Invoice/Sales Receipt.

Solved
Best answer December 08, 2020

Accepted Solutions
John C
QuickBooks Team

Refund a customer pre-payment credit balance

Hi solana Now that you have created the expense/cheque using the debtors account you will also have to link/close off the expense and the deposits within the customers account. To do this select receive payment from within New+ icon > enter the customers name and ensure that the deposit and expense are added/selected > save and close. 

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7 REPLIES 7
JonpriL
Moderator

Refund a customer pre-payment credit balance

Hello @solana,

 

You can write a cheque and use your Debtors account as the category. This way, it'll post a refund against the deposit you received from your customer. Let me show you how.

  1. Go to the +New button.
  2. Under SUPPLIERS, select Cheque.
  3. On the Payee menu, select your customer.
  4. Below the Category column, select your Debtors account.
  5. Enter the amount you want to refund.
  6. Select the appropriate VAT code. Say No VAT since the deposit you entered has no VAT associated with it.
  7. Click Save and close.

Additionally, I've got you this helpful article to get for the steps in creating a document showing all your customer's transactions: How to create and send customer statements?

 

If you have any other questions, please let me know in the comments below. I'll be here to help. Stay safe and well!

solana
Level 2

Refund a customer pre-payment credit balance

Hi @JonpriL 

 

I've created a Cheque as you described but that still leaves the customer's balance showing as Overdue (previously it was Open). I've included a screenshot. Any ideas how I can get this to zero?

 

refund.png

John C
QuickBooks Team

Refund a customer pre-payment credit balance

Hi solana Now that you have created the expense/cheque using the debtors account you will also have to link/close off the expense and the deposits within the customers account. To do this select receive payment from within New+ icon > enter the customers name and ensure that the deposit and expense are added/selected > save and close. 

View solution in original post

solana
Level 2

Refund a customer pre-payment credit balance

Thank you @John C that was the step I was missing before!! I didn't realise I had to link them that way. It's now showing zero.

John C
QuickBooks Team

Refund a customer pre-payment credit balance

Hi solana You're welcome, if you do need further assistance pleas let us know and we'd be glad to help.

Erika Brink
Level 1

Refund a customer pre-payment credit balance

Hello,

I have created the Expense for the customer deposit and written the check.  When I am attempting to receive payment to link the the account and bring the customers account to a zero balance I am receiving a message that my customer doesn't have an open invoice to go with it.  There is no invoice this was simply an overpayment by the customer.  I need to link the check I wrote to her customer record. I am hopeful you can assist. I see the Unapplied Payment sitting with an open balance of 326.15 but I am unable to select it. 

 

Rubielyn_J
QuickBooks Team

Refund a customer pre-payment credit balance

I can assist you to link the check you created to your customer record, @Erika Brink.

 

We can create a refund to handle your customer's overpayment. Using a Check or Expense to record the refund reduces your bank's balance and offsets the customer's open credit, overpayment, or prepayment. Let's open the check and make sure to choose the correct bank account under the Payment account drop-down and the category (A/R).

refund.PNG

 

Then, link the refund to the customer's credit or overpayment. Let me show you how:

 

  1. Choose the + New button.
  2. Click the Receive payment option.
  3. Select the same customer you used for the check when recording the refund.
  4. Fill out the other fields.
  5. Under the Outstanding Transaction section, choose the checkbox for the Expense or Check you created.
  6. In the Credits section, choose Overpayment you want to link with the refund.
  7. Make sure the payment is equal to the open balance, then select Save and close

 

Any linked credit note will be marked as closed, and a deposit will be marked as paid.

 

Additionally, here's an article you can read on how to void or refund payments you process through QuickBooks Online.

 

Keep in touch if you need further assistance in managing customer transactions in QuickBooks. I'll be around to help you more. Have a wonderful day.

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