Refunding a 3rd party Payment

Hi, @Judi. Thank you for the feedback on this issue.

There are three scenarios when it comes to recording a vendor refund.

Scenario 1- The vendor will give you a refund check for a bill already paid.

1. Record a Deposit of the Vendor Check:

• Go to the Banking menu, and then choose to Make Deposits.
• If the Deposit Payments window pops up, select OK.
• Click the Received from the drop-down in the Make Deposits pane, and choose the vendor who sent you the refund.
• Select the correct Payable Accounts to account in the drop-down From the account.
• The actual amount of the Vendor check is entered in the Amount column.
• Optional) Enter memo, check number, method, and a class of payment.
• Click Close & Save.

2. Record a Bill Credit the refunded amount is for:

• Click Enter Bills from the Vendors menu.
• To account for the return of goods select the Credit radio button.
• Enter the Vendor name.
• Select the Expenses Tab and enter the Accounts on the original bill.
• Type the corresponding amount for each account in the Amount section (the amounts may need to be prorated).
• Select Save and Close.

3. Link the deposit to the Bill Credit:

• From the Vendors menu, select Pay Bills.
• Check the Deposit that matches the Vendor check amount.
• Select Set Credits and apply the Bill Credit you created earlier then select Done.
• Click Pay Selected Bills, then select Done.

For more scenarios for one that best fits you, go to Recording a Vendor Refund.

If you have any more questions or concerns please don't hesitate to reach back out. Cheers to a safe a productive work week ahead.

I think you misunderstood the issue. Probably 90%+ of all payments we receive are from a customers' insurance company (third party). In this particular instance the insurance company paid us twice for a subcontract bill, once with the rest of the charges & again on it's own.

Which means we need to refund the insurance company for the additional payment (which had already been deposited and a sales receipt was created before the duplication was discovered.) 

I can initiate a credit memo for the duplication in the customer's "file", but when I go to issue the check QB automatically puts the customer's name & address on the check, if I try to correct it to the name of the insurance company QB doesn't apply it to the credit memo.

Hi there, Judi.

Since the check won't apply to the credit memo you've created, I suggest setting up a clearing the account. This way, you can move money from one account to another account. This account normally has a balance of $0.00 because you always take out the same amount that you put in.

Here's how:

1. Click the Lists menu and choose Charts of Accounts.

2. Click New from the Account drop-down list at the bottom.

3. From the Add New Account page, select Bank by clicking the radio button.

Below are the reason why you need to choose bank account:

• You can pay into a bank account via Receive Payments or Make Deposits.

• You can pay out of a bank account via Write Checks or Pay Bills.

• A bank account appears on the balance sheet and on the statement of cash flows to balances and changes in balances.

• To allocate expenses to overhead or class using a zero check, you must use a bank account as your Clearing account.

4. Click Continue.

5. From the Account Name field, enter Clearing Account.

6. Take note that do NOT enter an opening balance.

7. Hit Save and close.

Once done, you can now create a check to process the refund to the customer.

Please check this article on how to create, delete or void a check and print to to keep a record of the check in QuickBooks: Create, modify, and print checks.

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.