How to reconcile vendor payment return

Hi there, jenuneekor.

Thank you for coming back here to the QuickBooks Community. And, I appreciate you for providing detailed information on what you've done to resolve your concern.

Creating vendor credit is not necessary for the process. You can delete this entry and make a deposit instead to match the transaction on the Banking page. Please make sure to post the deposit to the Accounts Payable to an Expense account.

Here's how to delete the Vendor Credit: 

1. Click the Expenses at the left panel.
2. Choose the Expenses section.
3. Locate the vendor credit and click it to expand the page.
4. Click the More button and choose Delete.
5. You'll be prompted with Are you sure you want to delete this? Select Yes to confirm.

Once done. you can now go to the Bank deposit page to start creating a deposit. You can click this article to see the process: Record and make bank deposits in QuickBooks Online.

After that, you can start matching the deposit to an entry on the Banking page so your account stays accurate.

Please refer to this article on how you can reconcile your accounts so they always match your bank and credit card statements to avoid discrepancies: Reconcile an account in QuickBooks Online.

Please know that you can always post here if you have other QuickBooks concerns. I'd be happy to help you. Take care always.

Hi! Thank you so much for sharing this information. I deleted the vendor credit and went in to create the bank deposit, but I'm a little stuck here thinking it through. Even if I do these steps, if I ever need to pull up how much this vendor has billed us, how much we've paid them, etc. it won't show me the right information because in QB I have the initial bill and payment already recorded. So then when I get and pay the revised bill, later when we look at this vendor it will show that they billed us for two separate orders but it was one cancelled one, and then one new one. Also, my inventory won't be right because from the initial bill it shows that we ordered and paid for a # of units, and the new bill will show the same.

Could you consider this once more and provide any additional information?

The vendor billed us $125k. We wired them $125k. The banking matched with the bill. The wire was rejected by the recipient bank, so in my bank feed is $125k coming back in to my account. I now created a new bill for $125k that we are paying by check. Questions:

**How do I set this up so QB/our company knows that the initial invoice was basically never paid and is void? I created a second invoice and sent the check for it. I need to ensure that the $$ match up correctly, but also that this is reflected correctly in our inventory and our records for this vendor.

Thank you so much!

Thanks for reaching back out, @jenuneekor.

Let's take a look at what to do next!  Since the bill was matched in your online banking, this created a bill payment to the vendor's transaction.  When the payment was rejected you received that payment back.

Here's what you'll want to do:

1. On your Banking page, add the returned wire transfer under the category Accounts Payable.
2. For Vendor/Customer select the correct Vendor name.
3. Then click Add.

Next, you’ll edit the Bill payment in Vendor Transaction list.

1. Click the box beside the Bank Deposit to place a checkmark.
2. Uncheck the Bill.
3. Lastly, click on Save and close.

Additionally, if you created a refund receipt for the returned $125,000, you can delete this so we can add it as a Bank Deposit to Accounts Payable and apply that to the Bill Payment made.

I'd love to know how this goes! Please don't hesitate to reach back out with any additional questions you have. Take care, and happy holidays! 

Hi Jessica! Thank you so much for your help. I followed your steps, which were super clear - thank you! Now it shows under that customer a bill for $125,000, a bill payment for $125,000, and a deposit for $125,000 so it shows there's an open balance of $125,000. It looks exactly like what you did above. This should all result in a zero balance for the customer I believe? Then I create the new invoice and move on from there? Thank you!

Yes, it should show a zero balance, @jenuneekor.

You can now match your downloaded bank transactions with the Bill Payment. Here's how:

1. Go to the Banking menu.
2. On the Banking page, select the For Review tab.
3. Select the transaction to open it from the Receive section.
4. Click the Find Match button to open the match transactions.
5. Select all the checkboxes of the matching transactions, then verify if the total amount is the same as the downloaded transactions.
6. Hit Save.

Once completed, you can now create a new vendor invoice (bill) and start working from there. You can check this article for your additional reference about reviewing your downloaded bank transactions: Download, Match, and Categorize your Bank Transactions in QuickBooks Online.

You can always get back to us here in the Community if you have other questions. I'm just a few clicks away.

Hello. When I go into my banking transactions to "for review," the returned wire isn't there because in the steps above I clicked "add" and added it under the vendor as "accounts payable." So this doesn't show in my banking transactions anymore, and I have a balance of $125,000 for the vendor which isn't accurate. Could you please walk me through the steps from start to finish? A colleague and I have both walked through the steps outlined here and it ends with an open balance for the vendor of $125,000. Could you possibly provide a recommendation?

I appreciate all the efforts you've done to fix your issue, @jenuneekor.

The possible reason why you have an inaccurate balance is that you added the bank transaction instead of matching it to the bill payment you created in QuickBooks. To get this resolved, you'll have to undo the added bank transaction and match it to the bill payment.

Here's how to undo an added bank transaction:

1. Go to the Banking page.
2. Select the appropriate bank account.
3. Click the Categorized tab.
4. Find the added transaction, then click Undo under the Action column.

Once done, the transaction will go back to the For review tab. Then, follow the steps shared by my peer IamjuViel above to match the transaction correctly. For more guidance, feel free to check out this article: Match online bank transactions in QuickBooks Online.

After resolving your banking transactions issue, you can now proceed with reconciling accounts in QuickBooks: Reconcile an account in QuickBooks Online.

Should you need any additional assistance while managing your bank transactions, you can leave a comment below. I'll be sure to get back to you.

Hi.  We do not have our bank set up as a direct feed under banking, so I am not seeing this option you have outlined above. Is there another way to get this payment into QBO?

Hi,

Love your explanation below but I am using Quickbooks Enterprise - can you tell me how to record it with Enterprise

Hi,

thank you for the great explanation below but can you tell me how to do that for Quickbooks Enterprise please?

If the payment is returned less a bank fee, do you do the same but add a journal entry to AP to move the difference to the bank expense account?

I can assist you in managing a payment that has been returned less a bank fee, @HillsideViews.

You'll need to record the bank fee and void the check since your vendor didn't accept it as payment. Here's how:

1. Go to Expenses, then select Vendors.
2. Choose the vendor you paid and find the bounced check.
3. Select More and click Void from the pop-up menu.
4. Confirm that you want to void the check and choose OK.
5. Go to the + New button and select Expense.
6. Choose the vendor from the Payee dropdown menu if the bank charged it to them. But, if they set it to your account, select the bank.
7. From the Payment account dropdown menu, select the account you use to pay expenses.
8. Enter "NSF fee" in the Ref no. field to distinguish it from other expenses.
9. Under the Category column, select Bank Charges.
10. Enter the amount you were charged for and hit Save.

In case you want to put payments into the Undeposited Funds account before combining them into a deposit, you can check out this article for guidance: Deposit payments into the Undeposited Funds account in QuickBooks Online.

Please let me know if you have follow-up concerns about a payment returned less a bank fee. I'm always here to assist you.

This still leaves things messy. I sent $1,000 to a vendor overseas but their bank rejected it. A few days later I get back $990. If they had returned $1,000 I could follow the steps in the chain above but I am short $10.

I need to send the payment for the unpaid bills but my bills are recorded as paid. I want to be able to set up the payment again by selecting the bills (plus a new one which is now due). If I void the check, I have a payment going out and a smaller one coming back. What is the best way to deal with this?

Hello there, HillsideViews. I'm here to ensure that the payment that has been returned will be appropriately recorded. 

You'll need to void the check since your vendor didn't accept it as payment. Then, record the bank fee in an expense transaction separately. You can refer to the instructions provided by my colleague earlier. This approach will unlink the payment to the bill, allowing you to create a new payment. 

You can also record the returned payment directly using the bank deposit feature in QuickBooks Online. Here's how:

1. Hover to + New, then select Bank deposit. 
2. Go to the Add funds to this deposit section.
3. Choose the appropriate account and type in the amount. 
4. Once done, click Save and close. 

I'd still recommend that you consult your accountant about what is suitable for your books and ensure the accuracy of your financial records. If you don't have one, you can find a professional through this link: https://quickbooks.intuit.com/find-an-accountant/.

For future reference, you can run a Transaction List by Date report to get information on all money paid to a vendor for the year. It's the best way to keep track of your finances. 

Whenever you need my help concerning returned payments, I'm always here to back you up. Enter any queries by clicking the reply button below. 

I did not get charged a separate bank fee. I got less money back.

I sent out $1,000 dollars and this $1,000 bank transaction was matched to the bill payments I had recorded in QBO. Then a few days later the overseas bank sent back $990. If I void the check, I can make the $1,000 payment again but I need to do something to tidy up the $1,000 payment going out and the $990 return.

I'd be glad to help you on this one, @HillsideViews.

We can create a bank deposit in QuickBooks Online to record the refund you received from your vendor. You may follow the steps below:

1. Click the + New button.
2. Choose Bank Deposit.
3. Go to the Add funds to this deposit section.
4. Enter the reimbursed amount and choose the appropriate account. (you may ask your accountant on this one).
5. Add a memo as needed, then click Save and close.

Before proceeding to the next step, we recommend consulting your accountant.

Moreover, for the complete step-by-step guide you can refer to this article: Enter vendor credits and refunds in QuickBooks Online.

Furthermore, I've included this article to guide you on how to reconcile your accounts: Reconcile an account in QuickBooks Online.

Don't hesitate to drop a comment below if there's anything else on your mind or if you require further clarification about creating a bank deposit for a vendor refund. We're here to help address them. Stay safe!