Recording returned Payment

I've got you covered, @Augustine B.

You can create a journal entry and a bill payment check to record the returned payment due to wrong account information. Let’s go through these steps one at a time:

Firstly, let's enter a reversing journal entry. Here's how:

1. Sign in to your QuickBooks Online (QBO) account.
2. Click the + New button, then select Journal Entry.
3. Make sure the Date, Entry No, and Vendor name are correct.
4. Debit the checking account for the amount of the returned payment.
5. Credit the A/P account for the amount of the returned payment.
6. Click Save & Close.

Then, unlink the bill from the payment check and link it to the journal entry.

1. Click Expenses from the left menu, then select Vendors.
2. Locate the vendor you need, and open the original bill payment.
3. From the Bill Payment screen, put a checkmark in Journal Entry you’ve created.
4. Uncheck the Bill you originally paid.
5. Enter a Memo to indicate the returned payment. 
6. Then, click Save & Close.

Lastly, you'll have to create a new bill payment check to record the new payment transaction. 

1. Click the + New button, then select Pay Bills.
2. Choose the bill you originally paid.
3. Complete all other required information.
4. Click Save and Close.

Most importantly, I suggest seeking help from your accountant if you're unsure about these steps. This can get tricky and they know how to handle the next steps.

Let me know how it goes by leaving a comment below, @Augustine B. I want to make sure your concern is taken care of.

You may also want to run and customize reports in QuickBooks Online. This will help you view useful information about your business and transactions.

Have a great day ahead!

Hi Mark, 

Much appreciated for your detailed response. I have entered a reversal journal entry and followed your steps. It was very easy. Thank you very much. 

I am unsure, of how should I apply the refund amount appearing in bank feeds. 

Greatly appreciate your response. 

Thank you

Allow me to chime in, Augustine.

I'll help you match the bill payment to the refund amount that appears in bank feeds.

Let's locate the bill payment transaction using the Find match feature and match it to the bank transaction. I'll show you how.

1. Go to the Banking menu, then Banking.
2. From the For Review tab, locate the refund amount transaction.
3. Click the Find match option.
4. A Matching transactions window will appear, select the bill payment transaction.
5. Once done, hit Save.

If you're unable to see the bill payment transaction, you'll have the option to Exclude the refund transaction from bank feeds.

Check out this article for more details: Exclude a bank transaction you downloaded into QuickBooks Online.

I also recommend reconciling your account at least once a month to ensure bank and credit card statement balances match up with QuickBooks. For a complete guide, see this resource: Reconcile an account in QuickBooks Online.

You're welcome to post again if you need further assistance in QuickBooks. We're available to help you 24/7.

Hi Giovann, 

Thank you for your reply. There is no matching transaction as there is no entry related to the deposit of returned payment. So how should I apply them? Should I apply as a deposit?

Also, I don't want to exclude the transaction. 

I appreciate you for getting back to this thread, @Augustine B. Let me provide some insight on how to match and handle returned payments.

Since there are no matching transactions showing in the feeds, we can create and apply them as a deposit. 

Here's how:

1. Click + New and select Bank Deposit.
2. From the Account ▼ dropdown, choose the account you want to put the money into.
3. Select the checkbox for each transaction you want to combine.
4. Make sure the total of the selected transactions matches your deposit slip. Use your deposit slip as a reference.
5. Select Save and close.

For more information, you may also check out this resource: Record and make bank deposits in QuickBooks Online.

Additionally, let me share some relevant articles you can utilize to help manage your bank transactions in QuickBooks:

• Categorize and match online bank transactions in QuickBooks Online
• Reconcile an account in QuickBooks Online

Keep me posted if you have other questions about matching bill payments to the refund amount. I'll be happy to help you always. Stay safe!

This worked well for a returned payment that is in a large batch pay run and has to match the EFT amount for the batch

Let's say you have a $100 bill, $30 vendor credit applied and make a $70 bill payment. $70 bill payment is returned. How does QBO handle this? Does QBO keep the $30 vendor credit still applied? 

Let me provide insight how QuickBooks handles your vendor credit, @sarakkk.

To begin with, when you process the payment for the $100 bill, QuickBooks already applied the $30 vendor credit to it. Since your $70 payment got returned or refunded, QuickBooks will recognized it as your new vendor credit amount. It's also important to note that before recording the payment, make sure the Automatically Apply Credits feature is already turn off to prevent automatic credit application.

Here's how:

1. Go to Settings and select Account and Settings.
2. In the Advanced window, look for the Automation section.
3. Toggle the radio button for Automatically Apply credits to turn this off.
4. Select Save and click Done.

For future reference, you can check this article to learn how to run a report with vendor totals in QBO: Run a report with vendor totals.

If you have any concerns about managing vendor credit, please tag me in the comment section, @sarakkk. I'll assist you in any way possible.

Hello,

I followed all the necessary steps, but when I click "Save and Close," I receive the following message:

"The transaction you are editing is linked to others. Are you sure you want to modify it?"

I clicked "Yes," and then got another message:

"The transaction you are editing has been reconciled. Saving your changes could put you out of balance the next time you reconcile. Are you sure you want to modify it?"

I'm unsure how to proceed in this case. The payment was originally made and reconciled in the previous month, and I received the returned payment the following month.

What’s the best way to handle this situation so that my accounts remain balanced?

Thank you!

I would need specific information to advise you.There were a couple ofdifferent scenarios with returned payments. You shouldn't need to modify your original payment.

1) Create a journal entry - Debit chequing, credit Accounts payable, choose your customer.

2) Re-send the EFT payment

3) Match the new payment with your journal entry

Hi, 

I’m trying to handle a returned payment in QuickBooks Online and followed these steps:

1. Enter a reversing journal entry:

   • Signed in to QuickBooks Online.
   • Clicked the + New button and selected Journal Entry.
   • Ensured the Date, Entry No, and Vendor name were correct.
   • Debited the checking account for the amount of the returned payment.
   • Credited the A/P account for the amount of the returned payment.
   • Clicked Save & Close.

2. Unlink the bill from the payment check and link it to the journal entry:

   • Went to Expenses > Vendors.
   • Located the vendor, opened the original bill payment.
   • In the Bill Payment screen, checked the Journal Entry I created and unchecked the original Bill.
   • Entered a memo to indicate the returned payment.
   • Clicked Save & Close.

Lastly, you'll have to create a new bill payment check to record the new payment transaction. 

1. Click the + New button, then select Pay Bills.
2. Choose the bill you originally paid.
3. Complete all other required information.
4. Click Save and Close.

However, I’m having trouble completing this third step because the payment was an international wire transfer made in June, which the bank returned due to a name mismatch in July.

Modifying any changes to a reconciled month can cause discrepancies on your books, indster. Let me help ensure the accuracy of your books remains balanced.

Beforehand, may I know if there were discrepancy errors received on the previously reconciled month? Any additional information would be much appreciated.

If there were no discrepancies from the previous month, you can clear the returned payment received this month to ensure your account is balanced when regularly reconciling your books.

However, if there are any discrepancies found in the previously reconciled month, you'll need to undo the reconciliation. This way, the overall balance and transactions in your books stay accurate, and reconciling the succeeding months will be correct.

That said, I'd recommend consulting your accounting professional to help you guide and further check the accuracy of these entries.

Just in case you require additional guidance when QuickBooks doesn't match your bank statements at the end of a reconciliation, you may utilize this reference: Fix issues at the end of a reconciliation in QuickBooks Online.

I'll leave this thread available for any additional queries when managing returned payments in your account. Just reply in the comments below. Keep safe!

I think I skipped that part. Once you have created a Journal entry, you can reconcile the new wire payment to the journal entry. Do you use the match in banking transactions? The journal entry will be there (usually after all the bills) If you do this, your new transaction will be on your new reconcilliation and you can leave the first one alone.