Create credit memo for customer when we overcharged them for a product

Hey there, @Maverick2.

I love that you continue to visit us here in the Community. Let me guide you in handling customer credits in QuickBooks Desktop. 

If your customer overpaid you and wants a credit on their account, you don't need to create a credit memo as you already have an unapplied credit that acts as your credit memo. You can refund them with these instructions:

1. Go to your Banking menu and then Write Checks.
2. Choose the appropriate bank account.
3. Enter the appropriate check number and date.
4. Choose the customer in the Pay To The Order Of field.
5. Fill in the amount of the overpayment (credit balance) you wish to refund.
6. Pick the Accounts Receivable in the Expenses tab.
   
7. Hit Save & Close.

Next, link the check to the unapplied credits:

1. Go to the Customers menu and then Receive payments.
2. From the Received from drop-down, choose the customer.
3. Click the Discounts and Credits icon.
   
4. In the Available Credits section, select the check you created and then Done.
5. You may see a prompt to confirm transfer. If you do, click Yes. The amount will be applied automatically to the invoice.
6. Hit Save & Close.
   
   

With regards to the second scenario, you can either edit and resend the invoice or void and recreate it. However, both of these actions will affect your month-end. You may need to create an adjusting journal entry. I recommend reaching out to your accountant to understand the best way to record it.

Additionally, you may also apply the credit to an invoice. Check out this article for more info: Handle a Customer Credit.

Please come back and let me how these steps turn out. I'd be happy to help if you need more assistance with handling customer credits.

@LieraMarie_A  thank you for your response. Can you please explain how to do the first part again with Quickbooks Desktop? I do not use QBO.

Thank you!

Hello again, @Maverick2.

Thanks for coming back and letting us know about the product you're using. I missed out on seeing that detail. I've updated my answer above with the correct steps to do the first part in QuickBooks Desktop.

Keep me posted on your result after following the steps. I'm determined to ensure your success.

When I get to here:

Next, link the check to the unapplied credits:

1. Go to the Customers menu and then Receive payments.
2. From the Received from drop-down, choose the customer.
3. Click the Discounts and Credits icon.

There is no check available to apply. It is blank. Can you do your method again with more screenshots?

Welcome back, Maverick2.

Let's make sure that the Receive from drop-down has the correct customer. Otherwise, it's possible that there's no Check created for this customer. You can review the steps shared by LieraMarie_A on how to write a check.

Find out more about recording refunds in QuickBooks Desktop by visiting this article: Record a Credit Memo or Refund in QuickBooks Desktop.

You'll also want to customize customer, job, and sales report in QuickBooks Desktop to focus on the information that matters most to your business.

If you need other helpful articles in the future, you can always visit our site: Help articles for QuickBooks Desktop.

I've got your back if you need more help. I'm always happy to lend a hand. Have a good one.

@Charies_M I do know for a fact that I wrote the check, and chose the correct customer in the drop down. I saw the invoice I was working with when I chose the customer.

I can only imagine the hurdle you've been through creating a credit memo in QuickBooks Online, @Maverick2.

I'd like to provide some additional guidance in applying the credit to the customer's invoice.

Make sure to use Customer: Job when you create the credit memo. The Apply Credit to Invoice window will then open as a result. From there, choose the credit you'd like to apply automatically and click on Done. Please see the photos below for visual references:

If you're still unable to pull up an invoice to apply the credit, I suggest contacting our Customer Support team. They're capable of investigating this further and give you the best resolution to your concern.

For future use, read this article about keeping track of sales reports in QBDT: Customize customer, job, and sales reports in QuickBooks Desktop.

Just reply to this thread if you have other concerns handling credit memos or QuickBooks in general. We're here to be of help always. Take care!

@Mich_S that is not the question I had.

@Charies_M  :

Let's make sure that the Receive from drop-down has the correct customer. It has the correct customer, definitely.

Otherwise, it's possible that there's no Check created for this customer. I created a check, definitely.

Can you go through the process provided by @LieraMarie_A with screenshots of every step please?

I know this hasn't been an easy process for you, @Maverick2. I'm here to address your concern about how you can handle overpayment in QuickBooks Desktop (QBDT) seamlessly.

Since you mentioned that the invoice has been paid, then you'll have to create a credit memo for the overpayment so the credits will remain with the customer. Here's how:

1. Go to the Customers menu.
2. Select Create Credit Memos/Refunds.
   
   
3. Choose your customer from the Customer:Job drop-down.
4. Enter the products you're giving them credit for, then select Save & Close.
5. Pick Retain as an available credit for the prompt message.
   

However, if you want to refund your customer, then you can follow the steps outlined by LieraMarie_A above. Here are the detailed screenshots for the steps:

I'm also adding some articles below to view various ways you can track customer transactions in QBDT. Then, how Accounts Payable is used to track the money you owe your vendors and how it works.

• Accounts Receivable workflows in QuickBooks Desktop
• Accounts Payable workflows in QuickBooks Desktop

If you have additional questions, please don't hesitate to comment below. I'm always here to help. Keep safe!

Ok @Kevin_C , @Mich_S , @Charies_M , let's back up the bus. You are obviously not reading the entire thread. 

Let's break this down:

1. The customer was charged too much for a product.
2. The customer paid the invoice.
3. I want to refund the customer with a check.
4. @LieraMarie_A told me to write a check to the customer with A/R in the expense tab.
5. @LieraMarie_A told me to "receive payment" and select the check in the discounts and credits section to apply the check to the available credit.
6. I DID write the check to the correct customer.
7. I DID receive payment on the same, correct customer.
8. I tried that, and I didn't see a check in the credit window.
9. I asked for screenshots for this specific situation regarding a check refund showing every step so that I could see it.

Please pass this on to a USA based administrator or support manager.

I appreciate all the efforts you've exhausted in performing the steps, Maverick2. 

This isn't what we want you to experience while working with your QuickBooks. I personally understand that clear communication is key and ensure that there aren't any issues while doing so. 

In this case, I'd like to turn the tables around and ensure that you'll be able to take care of giving refund to your customer. 

1. Go to Customers, then Receive Payments.
2. Choose the customer in the “Received From” field.
3. Fill in the Payment Amount.
4. Be sure to choose an appropriate Date and method of payment.
5. If there are any unpaid invoices, this list will show up here in the screen.
   1. Apply your overpayment to an open invoice here. Be sure the invoice you choose is check-marked.
   2. Remember, this customer overpaid you, so the invoice(s) you choose to apply payment against will leave this customer with a credit balance.
   3. Click Save & Close. If you get a warning message, just basically ignore and click on OK.
6. Note: If there are no open invoices to apply your payment to, then there simply won’t be open invoices listed here. In this case, you can simply just click on Save & Close. If you get a warning message, just basically ignore and click on OK.
7. Now, to issue a check refund to this customer for the overpayment amount: 
   1. Go to your menu Banking and Write Checks.
   2. Choose the appropriate bank account.
   3. Pick the appropriate check number and date.
   4. Select this same customer in the “Pay To The Order Of” field.
   5. Fill in the amount of the overpayment (credit balance) you wish to refund.
   6. Very Important: Choose the account called “Accounts Receivable” in the Expenses tab towards the bottom of the screen.
   7. Click Save & Close.
8. Note: if you get a warning that states “Please choose a customer when using an Accounts Receivable account as a line item”, then choose this exact same customer in the field (within the same Expenses tab off towards the right side) called “Customer:Job”. If this field does not exist, then you may have to change a company preference setting.
9. Now, if you look at this customer’s AR balance, this check refund should be reflected here. However, you still need to apply this check refund to the overpayment credit; otherwise these two line items will always appear as open. To do this:
   1. Highlight the customer in the customer list, then click on “New Transaction” (at the top of the customer list, not in the company menu list) and choose, “Receive Payments”.
10. Within the Receive Payment screen:
    1. Do not fill in a payment amount; instead just highlight (not checkmark) the outstanding check payment amount as listed in the open invoices list, then click on “Discounts & Credits” listed as one of the button items towards the top.
    2. Find the “Available Credit” which is the overpayment amount and be sure it is check marked, then click “Done”.

• You will now notice there is a new column called “Credits” and thus the NET of the Amount Due + Credits is equal to zero.

1. Click on Save & Close.

For your reference, QBDT offers a wide variety ways that tell you how you can track customer transactions in terms of expenses and accounts payable. If you wish to know more about them, I encourage you to check out these articles: 

• Accounts Receivable workflows in QuickBooks Desktop
• Accounts Payable workflows in QuickBooks Desktop

Post a comment below if you have any other questions about giving a refund check to your customer. I'm always here to lend a hand. Take care!

Thank you! Perfect!