How to Reconcile a Refund From a Vendor for a Statement With a Credit Balance

Let me guide you on how to mark bills and credits as paid and fully applied, @NealeyFinance.

When paying a bill in QuickBooks Online, selecting more vendor credits than the total billed amount is unavailable. This is a built-in feature to ensure accurate accounting and prevent errors. However, there is still a way to achieve your desired outcome. You can create a credit card credit to account for the refund and link it to the remaining credits. 

It's essential to pay the bill with the total purchase amount first. Then, create a credit card credit affecting accounts payable to record your refund. 

Here's how: 

1. Go to + New, then click Credit card credit.
2. Click the Payee dropdown and select a vendor. 
3. From the Payment date column, enter the date you've received the refund. 
   
4. From the Category column, select Accounts Payable.
5. Complete the necessary fields.
6. Enter the refund or credit amount in the Amount column, then click Save and close. 

 Now, you can match the transactions in your bank feeds. 

1. Hover to Bank Transactions, and select the bank account associated.
2. From the For Review tab, look for the refund transactions then match this with the credit card credit created in QBO. 
3. If you won't be able to see a match transaction, click the Find other match option. 
4. Once the amount and transactions match, click Save. 

Lastly, let's link the existing vendor credit to mark it as applied:

1. Go to + New, then select Pay Bills. 
2. Tick the vendor credit transaction, then click Save. 

Moreover, I've added a helpful resource to guide you in reviewing your bank statement and QBO transactions: Learn the reconciliation workflow in QuickBooks.  

I'm still ready to back you up if you need more help with your vendor refund. I'll keep the thread open so you can comment back.

Thanks for getting back to me.  Is there a workaround for when the vendor credit is on a credit card?  That is our current situation, and the credit card account is not available for selection when creating a check.

Thank you for the prompt response, @NealeyFinance. 

Let me provide you with a workaround that will let you use your credit card account instead.

Link the bill and vendor credits using an expense transaction. Make sure that the vendor credits match the amount on your bill.

Here's how to do it:

1. Go to the + New button, then choose Expense.
2. Select the vendor with the credits, then a screen will pop up on the right. Choose the bill first before the vendor credit.
3. Choose the Credit Card Account.
4. Click Save and close.

After doing this, you can now match the transaction to your bank feeds.

1. Go to the Bank Transactions tab, then select your Credit Card Account.
2. Under the For Review tab, locate the refund transaction.
3. If 1 record is found, you can click Confirm.
4. This will automatically categorize the expense transaction.

You can now reconcile your account.

I'm adding this helpful article on how to put your online transactions to the correct accounts: Match online bank transactions in QuickBooks Online.

If you have more questions or concerns about your bank transactions, our Community team is always ready to provide you with assistance. Take care.

Thank you for the response, Janbon, but this still doesn't work.  As soon as I select the first bill, it redirects to the Bill Payment page where I cannot select more credit than the total billed amount and therefore cannot achieve the total refund amount.

I appreciate you for following the steps provided by my colleague and keeping us updated, @NealeyFinance. 

In QuickBooks Online, when you're paying a bill, the system does not allow you to select more vendor credits than the total billed amount. This is built-in to safeguard and ensure accurate accounting. But we can still achieve your goal by creating a credit card credit to account for a refund and link it to the remaining credits.

First, let's pay the bill with the total purchase amount: 
 

1. Go to + New, then select Pay Bills. 
2. Tick the match bill transaction, then click Save. 
   
   

Second, let's create a credit card credit in QuickBooks to record the refund you've received from your vendor:

1. Hover to + New, then select Credit card credit.
   
2. Click the Payee dropdown, choose a vendor. 
3. From the Payment date column, enter the date you've received the refund. 
4. Complete the necessary fields.
5. Enter the refund or credit amount in the Amount column, then click Save and close. 
   
   

Now, you can match the downloaded refund in bank feeds to the created 

credit card credit.

Lastly, let's link the existing vendor credit to mark it as applied:

1. Go to + New, then select Pay Bills. 
2. Tick the vendor credit transaction, then click Save. 
   
   

Moreover, once you're done categorizing and ensuring that all transactions are matched, you can start reconciling your QuickBooks account. This will make sure that financial records are kept accurate and discrepancies are dealt with promptly.

I'm still all ears if you need more help with your vendor refund. I'll keep the thread open so you can comment back.

Thank you for your response, @ShyMae, but as I mentioned above, this refund is on a credit card, so I cannot select it as the account for a bank deposit.

However, I remembered that this actually happened with the same vendor for the October 2022 statement, so I went back to see how I reconciled it at that time.  The process at that time involved three transactions:

1. I classified the refund as a credit card credit against our inventory account.
2. I made a bill to the inventory account for the refund amount noting it as an offsetting transaction per the statement credit balance.
3. I created a bill payment of $0.00 including all invoices, the additional bill, and all vendor credits.

This method worked again today to reconcile all statement transactions and the credit card refund.

Thank you for your and @JanbonN's help, and I hope my method