Recording a Refund to A Customer / Credit Card Refund

I've got you covered, @hechoamano.

I can definitely guide you in tracking the refund you've given to your customer. 

First, let's create a credit memo.

1. Click the Customers menu.
2. Choose to Create a Credit Memo.
3. Select the name of the Customer: Job.
4. Enter the credit memo details.
5. Click Save and Close.

Once completed, you can now write a check with the total amount of the refund. Here's how:

1. Go to Banking.
2. Select Write Checks.
3. Choose the Bank account where the check will be posted.
4. Enter the name of the customer in the Pay to the Order of.
5. Type in the total amount of the refund or credit.
6. In the section for Memo, enter the Credit Memo numbers.
7. Go to the Expenses tab.
8. Choose Accounts Receivable in the Account column.
9. Enter the amount of the refund and the name of the customer.
10. Click Save and Close.

Let's now link the credit memo to the check to avoid getting open credit memos and unapplied refund checks. Here's how:

1. Go to the Customer menu.
2. Select Receive Payments.
3. From the Received from the drop-down, choose the Customer.
4. Click Discounts And Credits.
5. In the Available Credits section, mark the check you created, then select Done.
6. Select Save & Close.  

Visit us here again if you have other questions about processing refunds for your customer. I'm always here to help.

Thanks for this. However, the client did not receive a check but a credit card refund. The refunded amount was subtracted from (and included in) a subsequent merchant services deposit. Is there a way to include that refund with a deposit of other payments?

I appreciate your time getting back here, hechoamano.

You have the option to keep the refund as credit for your client. This way, you can apply the amount as payments on their next invoice. Otherwise, refund it back to their credit card.

If you have not created a credit memo, you can follow these steps:

1. Go to Customers > Create Credit Memos/Refunds.
2. Enter the credit memo or refund information.
3. Click Save & Close. 
4. In the Available Credit prompt, you can select Retain as an available credit, Give a refund, or Apply to an invoice. 
5. Click OK.

Please see this sample screenshot for reference:

If you select the Give a refund option, you can select the credit card from the Issue this refund via drop-down menu. Here's a sample screenshot:

I'm also adding this article for more details about creating customer refunds: Record a credit memo or refund in QuickBooks Desktop for Mac.

Please let me know if you have any additional questions about the refund process. I'm here to help you some more. 

Hello, thanks, but I do not use Quickbooks for my credit card processing. Also, the article you linked to outlines the process of writing a check to the client. I want to apply the refund in a deposit since it was run through my merchant services and taken from a deposit that included other payments.

Thank you for getting back to us here on the Community page, @hechoamano.

I can think of two options to record the refund in QuickBooks Desktop. I'm happy to share them with you.

You can either enter a refund receipt using the bank account where you deposit the payment amount of the invoice or write a check/credit card charge using the accounts receivable account. Then, open the deposit (payment from the customer), edit it, unselect the invoice, and select the check/credit card charge.

To record a refund, select Create Credit Memos/Refunds from the Customers tab.

If you wish to write a check or credit card charge:

1. Choose Enter Credit Card Charges or Write Checks from the Banking tab.
2. Choose Accounts Receivable from the Expenses column.
3. Enter the amount and add the customer's name under the Name column.
4. Click on Save and Close.

Lastly, open the deposit/payment transaction, then select the check/credit card charge. Linking the refund to the deposit will cause the invoice to be reopened.

In case you need additional references while working with QuickBooks in the future, feel free to read the topics from our QuickBooks Desktop user guide.

Let me know if you have any other questions by adding a comment below, @hechoamano. I'm a few clicks away to help. Have a good day!

Wouldn't this credit card method put the credit on the company credit card rather than in the cash account ?  I couldn't change the account to the bank account.  The customer paid with a CC, bounced the CC, and the CC payment was already posted in QB in a prior month.  I'm trying to show the bounce and reopen the invoice. I can't use the bounced check option because the payment wasn't a check.  Im using QB desktop. 

Hi @Beth30,

The situation you stated above is unique. What my colleague @Angelyn_T shared above are the steps to record a refund for your customers.

In your case, it's a credit card payment that bounced. Since it's a credit card transaction, the Bounced Check feature isn't usable for it as well. With that said, I suggest you contact our Technical Support team for further assistance. They can remotely access your computer, with your permission, and provide you a resolution.

See this article for the steps: Contact QuickBooks Desktop support. You can keep it as a reference since it has their hours of operation.

I'll share with you this article as well: Void or refund customer payments in QuickBooks Desktop. It has a short description of when you can void or refund a customer payment. 

Tag me in the comments below if you have other questions with your QuickBooks Desktop company. I'll get back to you as soon as I can. 

To make things complicated, My credit card merchant account settled a refund along with other sales. So for example, on the same batch it shows 1 purchase of $100 and 1 refund of $150 so the bank settlement shows ($50). How would I enter that?

Welcome to the Community space, @gymlegend.

You can create a check to offset the amount ($50). You’ll just have to enter the sales as a negative amount. Let me guide you how.

1. Go to the Banking menu in your QuickBooks Desktop (QBDT) software.
2. Select Write Checks.
3. From the Expenses tab, enter the negative sales amount (-100) in the first line item.
4. Enter the refund amount in the second line item.
5. Select the appropriate account from the Account column. 
6. Enter the needed details and click Save & Close.

You can also read through this article for additional details: Create, modify, and print checks.

If you’re not sure which accounts to use in creating a check, I recommend working with your account for additional guidance. This way, we can ensure your book is properly recorded. If you’re not affiliated with one, check out our ProAdvisor page and we’ll help you find one from there.

In addition to this, you’ll want to utilize this link for reference in reconciling your accounts in the future: Reconcile an account in QuickBooks Desktop.

Let me know in your reply if you have other concerns or questions managing your transactions or with your QuickBooks. I’m just a few clicks away from you. Stay safe!

I had this same issue. I solved it by creating a deposit with the amounts credited on the settlement statement and then adding a negative charge in the amount of the refund with the customer name refunded. This is how I labeled the deposit:

Received From: John Doe

From Account: Revenue Account Associated with the sale

Memo- referenced the cc transaction ID

Class: Associated class activity code

Amount: negative refund amount

I then had to go back to the customer center and issued a credit memo for the refunded transaction and it brought the customer balance to $0

I just had this same problem. Here is what I did.

I created a deposit of the credit cards for the same date which I refunded the customer's charge. Then, in the deposit slip, I created a deposit of a negative amount for the customer. It then subtracted what the merchant services will subtract from my deposit. Now my deposit will match what merchant services will deposit in my account. This is based on adding a random check that is sent that doesn't have a matching invoice or statement charge. 

I am using QB online can you help me with this?

Hello there, @munozplumbing.

I appreciate you for reaching out to us here in the Community. I'm here to help you record the refund in QuickBooks Online.

You can use refund receipts to return credit card payments for an item or service. The way you record the transaction will depend if this is for a sales receipt or paid invoice.

To refund a payment for sales receipts:

1. Click the + New option in the upper-left corner.
2. Select Refund receipt.
3. Choose the customer you want to refund from the Customer ▼ dropdown.
4. Enter the details in the fields using the same info from the original sale. To credit back their credit card, in Payment method, select Credit card. To credit back their bank account, in Payment method, select Bank.
5. In Refund from, select which payment method and account you wish to refund the customer from.
6. Select Save and close.

For a paid invoice:

1. Click the + New option in the upper-left corner.
2. Select Refund receipt.
3. Choose the customer you want to refund from the Customer ▼ dropdown.
4. Enter the details in the fields using the info from the original sale.
5. Select which payment method and account you wish to refund the customer from.
6. Hit Save and close.

If you're also using a third-party system to process payments, you can enter a bank deposit manually in QuickBooks. This way, you can enter the income deposited into your bank account.

To exclude the refunded amount, you can add an account in negative figures. It will decrease the funds you're about to receive coming from your customers.

Please follow these steps:

1. Click the + New option in the upper-left corner.
2. Select Bank deposit below Other.
3. Choose the account where you want to deposit the funds.
4. Fill in the details you want to include in the first line.
5. On the second line, add another account and enter a negative amount to decrease the funds. 
6. Hit Save and close.

If you're unsure which account type to use for the negative amount, I suggest reaching out to an accountant. They can provide expert advice to ensure your books are accurate and error-free.

For more information, as well as how to void a sales receipt or invoice paid by credit card in QuickBooks, I recommend the following article: Void or refund customer payments in QuickBooks Online.

Leave a comment below if you need more help with customer refunds. The Community and I will be around to help you. 

You don't ever show how to handle the deposit from Merchant company with the credit attached.  I ended up adding a line item with a negative amount.  I'm not sure if it's correct but it made my deposit reconcile.

Unfortunately, Quickbooks does not have a built-in "normal" / "correct" way to offset a customer refund from a deposit.  It's unfortunate, since it's a very common scenario with credit card processing, ebay, etc.  That being said, here's what I've found is the easiest way to do it, which makes your QB deposits match your bank statements.

1) Create a temporary "clearing" account that will temporarily hold the deposit.  I call it "Misc. Clearing".  Make sure the account is of type "Bank", or it won't let you choose it in the next step.

2) Create a credit memo, then issue a refund "check" from the "Misc. Clearing" account.

3) Do "Record Deposits" in Quickbooks.  Select all of the sales receipts / payments for the normal sales that went into the bank deposit.  Manually add an extra line at the end of the deposit.  In the "Account" column, choose "Misc. Clearing".  For the amount, enter the amount of the refund as a negative amount.  The deposit total should now match the bank deposit amount.  Save the deposit.

Now, if you look at the "Misc. Clearing" account, it should have a negative entry from when you recorded the refund, then an offsetting positive entry from when you recorded deposit, leaving the account with a zero balance.

It would be REALLY nice if when you recorded a deposit, on the screen where you select payments, if it would also allow you to select any open credit memos to be subtracted.  I've been wishing for this feature for the past 20 years or so, but alas, we are forced to do stupid workarounds like this.  Sigh...

I just encountered this myself and how I finally was able to get the deposit recorded was to record it through a general journal entry using the bank and undeposited funds account.  I then went into record deposits and linked them all together with the final result being 0.  A little bit of extra work but the best way to record the refund on the customers account and then also have you merchant deposits match your bank statement.

Hi, Thank you!!! I am trying to do this as well.  Can you break down the exact steps that you did in QB to resolve the credit on clients cc through merchant card.  I need to figure this out so I can reconcile my bank statement ASAP.

Best,

D

Hi, can you break down the steps you took to resolve this problem.  I am trying to fix the same issue and can't reconcile my bank statment until I do

Thanks

Mac

Thank you for posting, Mac.

Can you tell me more about the issue you're trying to solve in order to reconcile your account and the QuickBooks version you're using? That will surely help us provide an accurate solution to the concern that you're having.

You can click the Reply button below to add more details.

I'm looking forward to hearing from you soon! Take care and have a wonderful day!

A customer paid for an invoice with a credit card.The credit card payment has been processed thru my Shopify account. I need to do a credit card refund for one of the items on the invoice. Shopify sends me a report each day with all of the transactions including the refund.How do I record this in Quick Books Online so that the refund shows on the customer's account and it is backed out of the credit card deposit?