Issue and record a customer refund in QuickBooks Online

Use this option to refund or adjust transactions that involve the accounts receivable account. Use a credit memo to document your adjustments. An example of when this option may be best used is a lost package.

The QuickBooks design has been updated! If this video doesn't match what you see in QuickBooks, use the in-app Search bar to navigate to the page you need.

Manage all kinds of payments in one place. Accept cards, ACH, Apple Pay®, PayPal, and Venmo. No matter how you get paid, manage it all in QuickBooks.

Step 1: Enter a credit memo

1. Locate the transaction you’d like to refund. 
2. Select More actions, then select Create credit memo. 
3. In the Customer field, select the customer you want to refund.
4. Enter the Credit Memo Date, Amount, and Tax. The Product/Service will be automatically added to the credit memo from the paid transaction you selected in step 1. 
5. Note: If you select an inventory item, QuickBooksputs it back into inventory. If the item is defective, or if you don’t want to add it back into inventory, make an inventory adjustment.
6. Select Save and close.

Note: If the customer overpaid, you don't need the credit memo. You’ll have an unapplied credit as your credit memo.

Step 2: Make the refund

1. Select + New, then select Expense.
2. In the Payee field, select or enter the customer you want to refund.
3. In the Payment account field, select the bank the money is being refunded from.
4. In the Category field, select the Debtors account (Accounts receivable).
5. In the Amount field, enter the amount of the refund.
6. In the Tax field, select the appropriate Tax (not inclusive/exclusive of tax).
7. Select Save.
8. Next, go to + New and select Receive payment.
9. Add the Customer and select the Payment method and Deposit to.
10. Balance should be 0 as they’ll cancel each other out.
11. Select Save and close.
12. If you have Online Banking, go to Transactions, then Bank transactions (take me there).
13. Match the record you find.

Use this option to refund or adjust transactions that don’t involve the accounts receivable account. An example of when this option may be best used is when an item or service doesn’t satisfy the customer.

If a customer requests a refund for an item or service, use refund receipts.

Note: Don’t enter a credit memo for an item or service refund. This could cause a double refund.

The QuickBooks design has been updated! If this video doesn't match what you see in QuickBooks, use the in-app Search bar to navigate to the page you need.

Get personalized help categorizing transactions with Full-Service Bookkeeping.

1. Select + New.
2. Select Refund receipt or Give refund.
3. Select the Customer ▼ dropdown, then select the customer you want to refund.
4. Select the Refund From ▼ dropdown, then select the bank where you deposited the  invoice payment.
5. Add all products or services the customer returned in the Product/Service column.
6. Fill in the date, quantity, rate, amount, sales tax, and other fields accordingly.
7. Select Save and close.

Note: If you want to give a partial refund, only add the items or amount you want to refund.

• Your customer wants to redeem their open credits.
• Your customer made a prepayment for an order, but they canceled it before they received the item or service.
• Your customer wants to be reimbursed for an accidental overpayment.

Record a refund to your customer with the Check or Expense option. This reduces your bank balance, and it offsets your customer's open credit, prepayment, or overpayment.

Step 1: Record the refund for your customer

1. Select + New.
2. Select Expense, Add expense or Check. If you're in Business view, follow the steps to switch to Accountant view first. Then come back to these steps.
3. Select the customer you want to refund from the Payee ▼ dropdown.
4. From the Payment account ▼ dropdown, select the bank account where you deposited the overpayment to.
5. On the first line of the Category column, select Accounts Receivable.
6. Enter how much you want to refund in the Amount field.
7. Fill out the other fields as you see fit, then select Save and close.

Step 2: Link the refund to the customer's credit or overpayment

1. Select + New.
2. Select Receive payment.
3. Select the same customer you used for the check or expense when recording the refund.
4. Fill out the other fields as you see fit.
5. In the Outstanding Transaction section, select the checkbox for the Expense or Check you created when recording the refund.
   Note: If you have automation to apply bill payments turned on, this step is done for you.
6. Make sure the payment is equal to the open balance, then select Save and close.