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 and then Bank Deposit.
3. Go to the Add funds to this deposit section:
   • Enter the amount refunded by the vendor and choose the Category/Account that you selected on the initial expense or check.
   • If this refund was for an expense that you linked to a customer or project, select the Track returns for customer checkbox, then select the customer or project. That way, your costs will not be overstated.
4. 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.

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. Usually, this is the category, product, or service you’re getting a 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 the vendor who 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: Use Pay Bills to connect the bank deposit to the vendor credit

Even though you aren’t paying a bill, this is the right thing to do. This last step is to keep your vendor expenses accurate.

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.

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 used here is the original expense account on the original bill.
6. Select Save and close.