Enter vendor credits and refunds in QuickBooks Online

Use these steps if you don't enter bills to track your expenses.

1. First, make sure you have already created the initial expense or check in QuickBooks and assigned a Category/Account to it.
2. Select + New.
3. Select Bank deposit.
4. Go to the Add funds to this deposit section:
   • Enter the refund amount you received from the vendor and select the same Category/Account that you used for the original expense or check.
   • Note: If the refund was for an expense that you linked to a customer or project, check the Track returns for customer box, then select the customer or project. This will prevent your costs from being overstated.
5. If you deposited customer payments for invoices into the bank account along with the vendor refund, add them in the Select the payments included in this deposit section.

Use these steps if you use bills to track your expenses. This makes sure that the credit is applied to the expense account you use for this vendor.

Step 1: Create a vendor credit

1. Select + New.
2. Select Vendor credit.
3. In the Vendor ▼ dropdown, select your vendor.
4. Depending on how you record purchases with this vendor, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting credit for.
   Note: If you select an inventory item, QuickBooks will put it back into inventory. If the item is defective or if you don’t want it added back to inventory, you can make an inventory adjustment.
5. Select Save and close.

Step 2: Apply vendor credits to a bill

You can apply a vendor credit toward any open or future bill. When you’re ready to use the credit, here’s how to do it.

1. Select + New.
2. Select Pay bills.
3. Select a bill for your vendor from the list. You'll see the available credit with this vendor in the Credit Applied field.
4. Complete the rest of the fields.

Sometimes a vendor may give you credit with them as a promotion or a thank you. Here's how to record the credit and apply it toward any open or future bill with them.

Step 1: Enter a vendor credit

This makes sure the credit hits the expense account you use for this vendor.

1. Select + New.
2. Select Vendor credit.
3. In the Vendor ▼ dropdown, select your vendor.
4. Depending on how you record purchases with this vendor, enter the Category details or Item details.
   • Note: This is usually the category, product, or service you’re getting credit for.
5. Select Save and close.

Step 2: Deposit the money you got from the vendor

1. Select + New.
2. Select Bank deposit.
3. In the Account dropdown menu, select the account where you got the refund.
4. In the Add funds to this deposit section, fill out the following fields:
   • Received from: Select which vendor gave you a refund.
   • Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
   • Payment method: Enter the method your vendor used to refund you.
   • Amount: Enter the amount of your refund.
5. Select Save and close.

Step 3: Apply vendor credits to a bill

Keep your vendor expenses accurate, even if you aren’t paying a bill.

1. Select + New.
2. Select Pay bills.
3. Select the bank deposit you just created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be US $0.00.
4. Select Save and close.

Sometimes a vendor may overcharge and issue credits back to a credit card. Here’s how to record vendor refunds on a credit card.

1. Select + New.
2. Select Credit card credit.
3. In the Payee field, select the appropriate vendor.
4. From the Bank/Credit account ▼ dropdown, select the credit card where you received the refund to.
5. Enter the Payment Date, refund Amount, Tax and Category.
   Note: The category is the original expense account on the original bill.
6. Select Save and close.