Can't make sense of when to issue a credit and when to issue refund

We can create a check transaction to clear the credit balance and unapplied payment, @lbisesi. I'm here to walk you through the steps.

To differentiate the two, a credit memo records a decrease in the customer's outstanding balance, while a refund involves returning the money to the customer due to overpayment, returned items, or any other circumstances similar to this.

Let's now clear the balances:

1. Go to +New and choose Check.
2. Choose a Payee in the dropdown.
3. In the Category details section, choose Accounts Receivable (A/R) for the CATEGORY.
4. Fill in the combined credit balance and unapplied payment under AMOUNT.

Then, link the check transaction with the credit balance and unapplied payment using the receive payment feature.

Additionally, you can refer to this article about personalizing your invoices in QuickBooks: Customize invoices, estimates, and sales receipts in QuickBooks Online.

Please return to this thread if you have other concerns about credit balance and refund. We're here to help you.

Ok, thanks.  This cleared up this one.  But here's my ongoing issue....In addition to Intuit Merchant Payments, we also use another 3rd party merchant payment vendor.  Often times I have to issue a refund through that vendor.  When the net deposit shows up in QBO (sometimes it is a negative amount if no other funds were collected on that same day), how do I handle the refund in QBO?  Do I issue a refund receipt?  If so, how do I match it up?

I have a solution that can help you in obtaining that information, lbisesi.

Handling a customer refund in QuickBooks Online will be based on various scenarios. Let me walk you through the process of recording a refund.

If the invoice has been paid, here's how:

1. Record a credit memo by selecting +New and clicking Credit memo.
   
   
2. Choose your customer and fill out important information.
3. Select Save and close.
   
   
4. Make the refund by clicking the +New and Expense.
   
   
5. Under the payee, choose a customer.
6. In the Payment account field, select the bank the money is being refunded from.
7. Select Debtors account (Accounts Receivable) in the Category field.
8. Fill out the necessary information, then click Save.
   
   
9. Next, go to +New and click Receive payment.
   
   
10. Fill out important information.
11. The Balance should be 0 as they will cancel each other out.
12. Once done, click Save and close.

Now, go to Transactions and click Bank Transactions to match the record you found.

For other scenarios in handling a customer refund, you can refer to this article for the detailed steps: Record a customer refund in QuickBooks Online.

If the scenario above doesn't match your situation, you can consider excluding the transaction. Then, manually record the refund using the refund receipt and add a memo for the vendor.

If you encounter any difficulties in handling your customer refund, please don't hesitate to let me know by leaving a comment below. I'm available and prepared to help you whenever you need it.

Ok, I did the credit memo, the expense but it's the matching that I have problems with.  I have a deposit that came in that consists of two invoice payments, that particular refund and the merchant fees.  Usually I hit "Match" and I find all the items in the outstanding list and then add a line to record the merchant fees.  However, there is nothing outstanding for the credit memo/refund I did.  How do I match that up?  I can't exclude it because it's included in a larger deposit.

Thanks for getting back to us, @lbisesi. I'm here to  route you to the right support that can provide the best approach for this situation. 

Rather than attempting to individually match the credit memo refund to the deposit, a simpler solution would be to:

1. Create a new Bank Deposit transaction in QuickBooks to record the full deposit amount, including the invoice payments, the credit memo refund, and the merchant fees.
2. On the Deposit transaction, you can add a line item for the merchant fees, which will deduct that amount from the overall deposit.

This will allow you to properly account for the full deposit amount, while also recording the merchant fee as a separate line item.

Since manually matching opposite transactions, where one is money coming in and the other is money going out, can become quite complex. I would recommend reaching out to QuickBooks Support. They'll be able to provide personalized assistance to help you identify any discrepancies and ensure your books are properly synchronized with your banking activity. 

You can follow the steps below to reach them:

1. Go to Help (?), then select the Search tab.
2. Click Contact Us.
3. Select the topic to connect with the right expert or choose Ask about something else and provide a brief discussion of your concern.
4. Click Continue.
5. Choose a way to connect with us:

• Start a chat with a support expert.
• Get a callback from the next available expert.

You may visit this article to learn how QuickBooks match and record bank deposits for you: Automatically record QuickBooks Payments bank deposits.

I've also included a detailed resource about matching transactions which may come in handy moving forward: Match online bank transactions
 

Feel free to get back to us if there is anything else you need help with in matching your bank deposits or if you have any concerns. We're here to assist you at any time. Take care!