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Leesa3880
Level 1

Invoice Refunds

We have recently moved from desk top to online so please can someone help me?

 

We hire out rooms, so raise an invoices to a customer called 'hall hire' and then allocate it a booking reference number to the booking. I have lots of invoices raised in this way before going to the online version but because of Covid-19 these hires have been cancelled and the deposit money returned.

 

Which way is best to get rid of these invoices? I have given the customers their money back but our bank account is not linked.

 

As an example I have an invoice raised to customer 'Hall hire' for £630, customer paid £100 leaving a balance of £530 but now that booking is unable to go ahead so I have given them the £100 back. I need to record the £100 refund and get rid of the whole invoice.

 

Thank you in advance

 

Leesa 

3 Comments 3
Rustler
Level 15

Invoice Refunds

You should have an income account called something like refunds/discounts

 

create a service type item and link it to the refunds/discounts income account, then use that item on a customer credit memo.  Apply the credit memo to the invoice.

 

Issue the refund and use your deposits liability account as the expense (reason) for the payment

milleraj21
Level 1

Invoice Refunds

Would it be acceptable to edit the original invoice with a return/allowance for the amount that will not be collected due to cancellation?  I don't see where to create a credit memo in QBO.  Thank you. 

katherinejoyceO
QuickBooks Team

Invoice Refunds

Welcome to this thread, @milleraj21. I'm here to share some insights on how to handle uncollected invoices due to cancelation. 

 

When invoices you send in QuickBooks become uncollectible, you'll need to record them as a bad debt and write them off. It will ensure your accounts receivables, and net income stays updated. 

 

First off, you'll need to create a bad debts expense account. Then, create a bad debt item. It's where you place the bad debt to balance the accounting. Here's how:

 

Create a bad debts expense account

 

  1. Go to the Settings menu, then select Chart of Accounts.
  2. Select New to create a new account.
  3. From the Account Type dropdown, choose Expenses.
  4. From the Detail Type dropdown, choose Bad debts.
  5. Enter “Bad debts” in the Name field, then click Save and Close.

 

Create a bad debt item

 

  1. Go back to the Settings menu, then select Products and Services.
  2. Select New, and then Non-inventory.
  3. In the Name field, enter “Bad debts.”
  4. From the Income account drop-down, choose Bad debts.
  5. Select Save and Close.

 

Once done, you can now create a credit memo for the bad debt, and apply it to the invoice. Here's how:

 

  1. Click the + New menu, then select Credit memo or Give credit.
  2. Choose the customer from the Customer drop-down list.
  3. Select Bad debts in the Product/Service section, then enter the amount you want to write off in the Amount column.
  4. In the Message displayed on statement box, enter “Bad Debt.”
  5. Click Save and Close.

 

Here's how to apply the credit memo to the invoice:

 

  1. Go to the + New menu again, then select Receive payment or Receive invoice payment.
  2. From the Customer dropdown list, select the appropriate customer.
  3. From the Outstanding Transactions section, select the invoice.
  4. From the Credits section, select the credit memo.
  5. Select Save and Close.

 

The uncollectible receivable will now appear on your Profit and Loss report under the Bad Debts expense account. 

 

For future reference, read through this article: Use reports to see your sales and inventory status. It will guide you through creating reports to view your sales within a specific period. 

 

I'll always be here if you need more help with your transactions. Take care.  

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