How to Categorize a Vendor Refund from Bank Transactions

Hello there, westandpinedesign. Thanks for providing detailed information about your concern.

When recording vendor refund, it doesn't do anything with the discount and refund given. Those are only for customers. To record a vendor refund, here's what you'll need to do:

To start, let's enter a vendor credit. Here's how:

1. In the left menu, click the + New button. 
2. Select Vendor credit or Receive vendor credit.
3. In the Vendor drop-down, select your vendor.
4. Enter the necessary information on how you record purchases with the vendor.
5. Select Save and close.

Then, let's deposit the money you got from the refund. 

1. In the left menu, click the + New button. 
2. Select Bank Deposit. 
3. In the Account drop-down menu, select the account where you got the refund.
4. Go to the Add funds to this deposit section.
5. Select the vendor who gave you a refund in the Received from column.
6. Choose Accounts Payable in the Account column.
7. Enter the amount and the method your vendor used to refund you.
8. Select Save and close.

Once done, continue to Step 3 found on this article to connect the bank deposit to the vendor credit: Enter a refund from a vendor. After that, check the balance on your Accounts Payable.

If you have more questions regarding this or any QuickBooks concerns, feel free to comment back below. I'll be here to help. Have a great day.

The problem with these steps, is the Bank Account is already connected.  (That's one of the first things the Start Up Videos tells you to do.)

Which means the original purchase transaction was already recorded from my bank.   And the refund money was automatically deposited into the bank account, and showing as a transaction that I need to review.

This is what I need to review in my "Bank Transactions".  

How do I Record this Vendor Refund from my bank?

Thank you for sharing your concern in the Community, westandpinedesign! 

I'll make sure that you can record a vendor refund from your bank.

You can create a bank deposit to track this refund. You don't need to enter a vendor name as long as you select the correct expense account.

Here's how:
 

1. Click on the + New button.
2. Under Other column, click Bank Deposit.
3. From the Account box, select the expense account used upon purchasing the equipment.
4. On the Add funds to this deposit section, choose the Account where the money is coming from.
5. Enter the Amount.
6. Press on Save and close.

You can check this article link for further information on how to enter a refund from a vendor.

​​​​​Feel free to reply to this thread. I'm always here to help.

Did you ever find a solution to your question? I have the same problem and don't understand if I should put "refunds given" or "refunds received" for the refund I received from the vendor.

Hi Procamdetailing,

Thank you for taking the time to get help with your vendor refund. I'll share with you some scenarios that will guide you through recording it.

Instead of using a refund account, you'll want to use the expense account of the item that you paid for. In this way, the posted expense in that account will be reversed.

If you purchased an inventory item using your bank account and your vendor returned the items with a refund, you can record the refund as a bank deposit and use the A/P account in it. It will turn into credits in your vendor's profile and becomes a matching entry to the downloaded transaction. On the other hand, you'll also want to create a vendor credit and use the same item to replenish its quantity.

After recording both transactions, you can link them together using an expense, as shown below. This will close them and prevent you from applying these credits as payments to future bills.

If you purchased an inventory item with a credit card, you'll enter a credit card credit. Then, use the same items to also increase its inventory count. That's the only thing you need to do for a refund to credit card purchases. This credit card credit can be a matching entry to the downloaded transaction.

You can also check about handling vendor credits and refunds for your additional reference.

I'm just around if you need more help managing your refund. Take care and good evening!

If the vendor credited a refund to the card that was used, either a debit card or credit card, and that credit shows up in the bank feed for that account, should a vendor refund still be credited as described?  Could the transaction in the feed simply be classified and the associated accounts be credited? If not, why?  If not, and a vendor refund needs to be credited as described, should the transaction showing the vendor refund credit in the bank feed be excluded so as to avoid counting the refund twice?

Hi chris280,

You have me to help you record a vendor credit.

The vendor credit showing in the bank feeds has to be categorized. To match the transaction from the Banking page, you'll have to create a deposit. Here's how:

1. Click the New + icon.
2. Choose Bank Deposit.
3. Under Add funds to this deposit, choose the vendor name in the Received from field.
4. Choose Accounts Payable in the Accounts field, then enter the credit/refund amount in the Amount field.
5. Select Save and close.

Afterward, match the deposit to the bank transaction:

1. Find a downloaded transaction with the Match option in the Action column.
2. Note the Date, Description, Payee, and amount spent or received.
3. Select the downloaded transaction to expand the view.
4. Review the Matching records found in QuickBooks. It is the possible matching transaction you already entered in QuickBooks.
5. Select the link next to each match to get more details.
6. Make sure this is the correct match. In particular, review the Deposit to, Payment method, and Bank account fields on forms for the existing transaction in QuickBooks.
7. If this is the correct match, close the open transaction.
8. Select ​Match​.

To give you more tips about managing vendor credits and recording cash backs in QuickBooks Online, please check out these links:

• How can I enter a cashback into my credit card account?
• Learn how to record a refund from a vendor in QuickBooks Online

Let me know if you have any other concerns with recording vendor credits in QBO. I'm always ready to help. Take care!

I followed these instructions, several times, several ways.  Everything works, except now the total transaction amount for the vendor that gave the refund is now incorrect at the bottom of the vendor transaction list.  Three new line items are added after recording a refund: Bill Payment, Deposit and Vendor Credit. The refund amount shows up twice, reducing the total of the transactions in the transaction list for the vendor by twice what it should be. The refund credit is shown in the Deposit line item, and shown again in the Vendor Credit line item.  The Bill Payment line item shows a zero dollar amount.  I have not been able to fix this, nor am I sure if this even needs fixing.

QUESTION: Is this going to cause a problem in other parts of QB?

If you don't know the answer then just say so, or go find someone who does, but please don't copy and paste a canned response or link to a generic article.  I have spent way too much time trying to sort this out already.

Thank you.

Hello there, chris280.

I appreciate you for getting back to us. I'll help you figure this out.

You'll want to make sure that transactions are linked properly. This way, it won't display the refund twice. Or you may delete and recreate all the transactions to ensure to link transactions correctly.

And if there is really a duplicate transaction, you can delete it to not show on your vendor's data. Here's how:

1. Go to the Sales or Expenses menu.
2. Locate and open the transaction.
3. Review the transaction. Make sure you need to delete it.
4. Select More in the footer. Then select Void or Delete.

Moreover, you can get more hints about tracking your other vendor transactions through this link: Enter expenses, pay bills, write checks, and manage suppliers.

If you need further assistance in managing your vendor transactions, just leave us a message below. We’re always here to help. Take care!

"You'll want to make sure that transactions are linked properly."

Yes.  Please explain how to do this.

"Or you may delete and recreate all the transactions to ensure to link transactions correctly."

I have tried this several times now, and the result does not change.  Does this look like they are linked correctly?

Your issue ends here, @chris280.

Based on the screenshot you've shared, you correctly linked the vendor credit to the deposit. Please know that linking a credit into a deposit will offset the balance. This shouldn't show the refund amount as twice.

If the refund amount still showing twice, you may have added the vendor refund credit from the bank feeds and created a new one in QuickBooks. To get this resolved, you'll want to exclude the vendor credit from the banking feeds to avoid duplicates. To do so, you can follow the steps below:

1. Go to the Banking menu, then select the appropriate bank account.
2. Select the Categorized tab and find the added vendor refund. Then, click Undo under the Action column.
3. Go back to the For review tab, then select the vendor refund and click Exclude.

I'm adding this article for more guidance: Exclude a bank transaction you downloaded into QuickBooks Online.

You might also want to check out this article to learn more about linking vendor credit into a deposit: Enter a refund from a vendor.

Should you need additional assistance linking vendor credit into a deposit, I'm available here to help any time! Have a good one, @chris280.

Thanks for answering the question that I asked yesterday, which was ignored by the two previous respondents.

"should the transaction showing the vendor refund credit in the bank feed be excluded so as to avoid counting the refund twice?"

I take it back.  Excluding the deposit from the bank feed does not fix the problem of the refund being deducted twice from the vendor transaction list.

Anyone else at QB care to offer any other guesses?  Because you know, trying to run a business leaves me with nothing but time on my hands to chase this stuff down.

Hi there, chris280.

Thanks for updating us on what happened after following the steps shared above. Then, this isn't also the kind of impression that I'd like you to have in managing your vendor's transactions. With this, I'll ensure you'll be routed to the right support team to assist you further on this matter.

Based on the screenshots you provided, the way you entered the refund and linked the entries is correct, and no duplicate transactions should exist on your end. As mentioned by my colleague, it is possible that a vendor transaction or refund credit is added from the bank and manually created a new one in QuickBooks, resulting in a duplicate.

Since the issue persists after excluding the entry, I recommend contacting our QuickBooks Support Team. They have the tools to pull up your account in a secure environment which we're unable to do it here in the Community. This way, they'll be able to investigate the cause of the duplicate.

Lastly, you may refer to this article to see details on how you can run a particular report that will reflect all payments made to vendors: Run a report with vendor totals.

Don’t hesitate to click the Reply button below if you have other concerns about double entries. I’ll get back to help and make sure you’re taken care of.

It worked for me

Thank you

Thanks for updating us on this, Losangelessignco.

We're delighted to know that you're able to resolve the issue you're facing in QuickBooks Online.

Also, you can always visit our Help articles page for reference. There, you can read some of our helpful articles that will guide you in your future tasks.

You can always keep in touch if you ever need help with QuickBooks again in the future. Have a great rest of your day!

I'm confused as this is a response to @westandpinedesign comment stating that the refund is already recorded as the bank account is already connected. 

How do you simply record a transaction as a refund from a vendor THAT IS ALREADY IN YOUR TRANSACTIONS? 

Thanks for posting here, @cory222. I want to ensure you'll be able to record the refund in QuickBooks Online (QBO).

In QBO, creating a refund depends on how you enter the purchase transactions. For instance, you can record it as a bank deposit if you create an expense or use the write checks function. Here's how:

1. Ensure you've already added the initial expense or check in QBO and assigned a Category or Account to it.
2. Once done, select the + New button and choose Bank Deposit.
3. Then, navigate to the Add funds to this deposit section and enter the amount refunded by the vendor.
4. Select the Category/Account linked to the initial expense or check (check the Track returns for customer box, if this refund was for an expense that you linked to a customer or project).
5. 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.

On the other hand, you can create a Vendor credit to record a refund. Let me guide you on how:

1. Select the + New button at the left and select Vendor credit.
2. Pick the name of the Vendor.
3. 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 credit for.
4. Click Save and close.
5. Next, deposit the amount and use the Pay Bills to connect it to the vendor credit. 

I also recommend reaching out to your accountant to further advise you on how to properly record the refund in QBO. This is also to ensure that your account for the transactions accurately. For reference, please read this article: Enter vendor credits and refunds in QuickBooks Online. 

If you have any other concerns about recording refunds in QBO, please don't hesitate to post again here. Have a good one. 

WHY IS IT NOT AS SIMPLE AS MARKING THE BANK DEPOSIT AS A "VENDOR REFUND"???? Obviously, this is confusing to everyone. Why not make it easier? Why do you have to go through 20 steps to get QB to understand what a refund is from a vendor....???

Thanks for joining us here, CONFUSED15.

We appreciate your feedback about the process on how to record a vendor refund. Please know that the steps are necessary to make sure that your bookkeeping is accurate in QBO.

I would also recommend sending a feature request or product suggestions directly to our engineers. Here's how:

1. Go to the Gear icon and select Feedback.
2. Type in your feedback and suggestions about recording vendor refund.
3. Click Next to submit them.

It will be forwarded to our Product Development team to help improve your experience in QBO. You can track feature requests through the QuickBooks Online Feature Requests website.

The Community is always here if you need anything else. 

If a refund from a vendor is automatically populated under the "Banking" tab and the "For Review" section as an "Uncategorized Expense," wouldn't it be easy to just put it under the same expense category under which the purchase was made? 

For example: an item purchased for inventory for $20 is categorized correctly in QBO as "Cost of Goods Sold." For whatever reason, the item is returned to the vendor. The vendor then issues a refund of $20 to the same credit card used to purchase the item. QBO downloads the refund automatically but leaves it as an "Uncategorized Expense." Is it correct to simply categorize the refund under the "Cost of Goods Sold" category rather than creating a Credit Card Credit or Vendor Credit, thus creating multiple transactions that inflate the books? 

I look forward to your answer.

I have the same question but not seeing the answer here.  I made a purchase at Staples for $1024.  I returned it the next day and they refunded me the entire amount, $1024.   I need to know how to categorize this refund to my credit card, under the baking review tab - WITHOUT going to NEW >> CREDIT CARD CREDIT - because this will still show the expense in my P&L for the $1024 item and will not make it go away. 

YES! You explained this issue perfectly... which no one seems to be able to answer! We've been scouring the community questions and answers to try to solve this exact problem. 

Did you ever figure it out? Thanks!

Hi , I followed the steps to categorize a refund from a vendor, but I'm not sure whats that Step 3 you are referring to after I did the steps on "Then, let's deposit the money you got from the refund. " section. 

Can you help here please ?

Thanks in advance.