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Create and apply credit memos or delayed credits in QuickBooks Online

Learn when and how to give a credit memo or delayed credit to customers in QuickBooks Online.

Unsure whether to enter a credit memo or delayed credit? Here, we outline what makes these two different, and how you can apply them to your customer transactions.

Note: If you need to make a refund, here’s how to return your customer’s payment.

Some customers prefer using their refund as available credit they can use to reduce the balance on their next invoice.

In QuickBooks, you can give credit to a customer using a credit memo or delayed credit. If you're new to these types of transactions, here are the key differences between the two:

Credit memo

  • Your customer can use their credit memo as a payment to an invoice. They can choose to use all of their credit memo or a portion of it.
  • You can apply a credit memo when recording payment for a customer’s invoice.
  • Credit memos impact sales reports, even when you don't apply them on invoices.

Delayed credit

  • Your customer can use their delayed credit to reduce the balance of an invoice.
  • You can add a delayed credit to an invoice as a line item.
  • Unlike credit memos, unused delayed credits don't impact sales reports until you apply them to invoices.
  • If you want to track a customer's credit for future use but don't want it to affect their current balance, use a delayed credit.

Create and apply a credit memo

Step 1: Create a credit memo

  1. Select + New.
  2. Select Credit memo or Give credit.
  3. Enter the customer’s name, then fill out the required fields:
    • Date
    • Products/service items
    • Quantity
    • Amount
  4. Select Save and close.

Step 2: Apply the credit memo to an invoice

You can choose to manually or automatically apply credit memos to open invoices.

Manually apply a credit memo

Here's how to manually apply a credit memo to an invoice. This process gives you control over which open invoice you can apply a credit memo to.

  1. Select + New.
  2. Select Receive payment or Receive invoice payment.
  3. Enter the customer’s name, then fill out the required fields:

    Note: Make sure you choose the same customer or project you selected in the invoice.

    • Date
    • Memo (optional)
  4. Leave the fields Payment method, Reference no, Deposit to, and Amount received blank.
  5. In the Credits section, select the credit memo from Step 1. Then, in the Payments column, enter how much credit your customer want to use.
  6. Make sure the total to pay (if any) is correct after applying the credit memo.
  7. Select Save and close.

Automatically apply credit memos to invoices

Here's how to automatically apply credit memos. This lets QuickBooks use credit memos as payments for newly created or open invoices.

  1. Go to Settings ⚙, then select Account and Settings.
  2. Select Advanced tab, then select Edit ✎ in the Automation section.
  3. Select Automatically apply credits.
  4. Select Save, then Done.

Create and apply a delayed credit

Step 1: Create a delayed credit

  1. Select + New.
  2. Select Delayed credit. Or if you're in Business view, follow the steps to switch to Accountant view first. Then come back to these steps.
  3. Enter the customer’s name, then fill out the required fields:
    • Date
    • Products/service items
    • Quantity
    • Amount
  4. Select Save and close.

Step 2: Apply the delayed credit

Note: Keep in mind that adding a delayed credit to an invoice from a prior accounting period will affect that period's balances.

  1. Select + New.
  2. Select Invoice or Send Invoice.
  3. Select the customer you want to apply the credit to, then fill out the fields as usual.

    Note: You should see the available credits from the right of your invoice screen. If you don’t, select the small arrow next to the invoice balance.

  4. To add a delayed credit to the invoice, select Add.
  5. select Save and close.

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