Thank you for reaching out, Nate. QuickBooks acts as a bridge between your bank and your client's card, so you don’t need to "send" the money back to QuickBooks first. Instead, QuickBooks either moves the money for you (if you're refunding using QuickBooks Payments) or records the move you made elsewhere (if your refunding externally).
If you use QuickBooks Payments, you can electronically return the money via the Merchant Service Center. You don’t need to "send" funds to QuickBooks, once you locate the transaction and process the refund, the system automatically pulls the money from your bank to credit your client's card. Afterward, you must manually record the transaction in QuickBooks for accounting purposes, as refunding from the Merchant Service Center does not automatically update your books. Please note that refunds must be issued within 90 days, it takes 7 to 10 business days to appear depending on your client's bank, and original processing fees are not refunded.
If you do not use QuickBooks Payments, you will need to process the refund externally from your bank to your client's credit card, make sure to verify those details with your clients first. Then, manually record a Refund receipt in QuickBooks. Also, you can only refund up to the amount of the original sale, and the request must be processed within 90 days of the initial transaction.
The complete steps and other information for both options can be found in the article under the sections "Before you process ACH refund" and "Issue a refund manually: Void or refund customer payments.
Recording the refund ensures your bank reconciliation stays accurate by matching the transaction to the actual withdrawal on your statement. It also adjusts your sales reporting to prevent over-reporting income and creates a clear customer history while ensuring your books aren't double-counted.
Please don't hesitate to leave us a response if you have other questions or concerns.
