How to record vendor refund

Hello there, gcicabinets.

I can definitely help you with recording a vendor refund.

The first thing we need to do is link the vendor refund check to a vendor credit. You'll have to enter the vendor refund using a bank deposit. Then, you can proceed with linking it to the vendor credit. Following these steps, you'll have to pay the bill using vendor credits.

For the step by step guide, you can check out this article: How do I handle vendor credits and refunds?

If you need further assistance, feel free to live a comment below.

I'm trying to do the same thing - record a refund check from an insurance company, but the instructions aren't working for me. I added a Vendor Credit and I added the check as a Bank Deposit. Then when I try to enter in an Expenditure or a Check for the Vendor, only the Vendor Credit shows up in the Add to Expense window; the Deposit isn't there. When I try to add the Vendor Credit, I see a popup telling me that I cannot add a credit for a vendor without any open bills. How do I link the Credit and the Deposit?

Hi, @office2.

Thanks for reaching out to the Community space. I’m here to help you link the vendor credit and the deposit so you can record the refund check in QuickBooks Online.

The steps you’ve taken are actually correct. However, something's missing when you enter the Bank Deposit that’s why you’re unable to link it to the vendor credit.

Let me share the steps you need to complete the process, here’s how:
 
First, you need to create a Vendor Credit. To do that:

1. Click the Plus (+) icon and select Vendor Credit.
2. Enter the necessary information.
3. Click Save and close.

Then, create a Bank Deposit. Here’s how:

1. Click the Plus (+) icon and select Bank Deposit.
2. Enter the necessary information.
3. On the Add funds to this deposit section, select the vendor.
4. On the Account column, choose Accounts Payable (A/P).
5. Enter the amount.
6. Click Save and close.

Lastly, create a Check to link the two. Follow the steps below:

1. Click the Plus (+) icon and select Check.
2. Select the vendor’s name as the payee. Once you do that, the Deposit and the Vendor Credit will show on the right side of the screen.
3. Click Add on both Deposit and Vendor Credit.
4. Click Save and close.

Once you followed the steps above, you’ll be able to record the refund check successfully. For more information on how to handle vendor credits and refunds, check out this article: https://quickbooks.intuit.com/community/Income-and-expenses/How-do-I-handle-vendor-credits-and-refun....

Let me know if you have questions. I’ll be here to help. Have a good one!

I am having the same issue. I have followed all the above steps however I do not have an 'Accounts Payable' account. Can you please advise?

Thanks for chiming in this conversation, idrees.

I'm here to share some details about the Accounts Payable account in QuickBooks Online (QBO).

The moment you create a company, QBO creates specific accounts by default and enters other special accounts when certain features are turned on in the settings.

The Accounts Payable account is automatically created when you enter a bill. Once created, you'll then see Accounts Payable in your Chart of Accounts. You'll find more details in the "Accounts Receivable and Accounts Payable" section of this article: How to manage default and special accounts in the Chart of Accounts.

Here's how:

To create a bill:

1. Click the Plus sign (+) icon.
2. Under the Vendor section, select Bill (see the first screenshot).
3. Enter the necessary details and click Save.

To search an account in Chart of Accounts:

1. Select Accounting on the left pane.
2. Choose Chart of Accounts.
3. Enter Accounts Payable in the search box (refer to the second screenshot).

Once done, you're now ready to record the vendor refund check. You can check the detailed steps that my peer KhimG has provided.

That should work for you. If you have further questions about QBO, feel free to let me know. I'm always happy to help. Have a good day! 

Thanks for your reply. I have been using QBO every day for the last year so I am familiar with the above however there is definitely no Accounts Payable account.

I can help you record the supplier refund, idrees.

It seems you're using QuickBooks Online UK version. They don't have Accounts Payable in the Chart of Accounts. When you enter the refund cheque on the Bank Deposit page, choose the Creditors account. Then, just follow my peers' detailed steps to finish recording the refund. 

You can check the screenshot below.

Of course, you can always get back to me if you need further help. I'm just here. 

Hi, I'm trying to do the same thing but I only have the QB online Simple Start subscription. It keeps telling me I have to upgrade to use this feature. I can create the Bank deposit, and the expense. it even allows me to select the amount to "add to expense," but when I go to save and close I get an error message telling me I don't have this feature. Surely there is some way to do this in the basic version?

Hello there, Sophie4.

It would be my pleasure to answer any questions you may have about the QuickBooks Online Simple Start version.

Creating vendor credits is only available in the Essentials and Plus version. As a workaround, you can use the Bank Deposit feature to record the refund.

I also encourage you to seek an expert's advice from an accountant to ensure your books are correct. They can assist you with choosing the right accounts for the transactions.

In case you want to explore the other versions, you can try our sample company test drive. The article I'm adding below will route you to the QuickBooks URLs:

How to Test Drive QuickBooks Online.

Please let me know if there's anything else I can do for you, the Community will always have your back.

I have a similar issue. I have a workers comp insurance refund check to deposit (not hold for credit). The original fee was paid by credit card so the insurance company is not listed as a vendor. Can I simply select "Bank Deposit," select my credit card as "received from," and enter "workers comp insurance" as the account? I am using 2016 Desktop QB.

Thanks for joining the thread, EdwardSam.

I'm by no means an accounting professional, but I do have some information to provide that can help get you on the right track.

To clarify, when you received the refund check, was it deposited to your bank account, or was it returned to your credit card account? If it was deposited in your bank, then you could follow the solution that you've suggested.

However, if it's the latter, then it would be better to record a Credit Card Refund/Credit instead. That being said, you'll need to set the insurance company as a vendor, then follow the steps below:

1. From the Banking menu, choose Enter Credit card Charges.
2. Make sure to select the correct Credit Card account.
3. Enter the insurance company in the Purchased From field.
4. Select the Refund/Credit radio button.
5. Enter all the necessary details such as the Date, Expense account, and Amount.
6. Click Save & Close.

For additional insight about this, I'm also including this article: Set up, use, and pay credit card accounts

Let me know if this isn't quite what you're looking for, I want to make sure this is taken care of. Have a great day!

Aldrin, I received this refund as a paper check payable to my company. If it doesn't screw things up I'd like to do it the way I first suggested to keep it simple. I'm in the process of selling my business and likely won't have to do this again. I don't feel like setting up new accounts now after 26 years!

Thanks for your help.

Hi, i followed your steps but do not see the vendor credit when i go to "pay bills".  what am i doing wrong?

hi, i tried that, but i don't see the vendor credit in the paybills screen.  what am i doing wrong?

Greetings, @passionbeauty.

Let me be the first to welcome you to the Community. I’d be glad to assist you in applying a vendor credit to an open bill in QuickBooks.

If you already have an existing vendor credits, you should be able to apply it to your bill. Since you have not mentioned what specific QuickBooks product you’re using, I’m adding the solution for both QuickBooks Online and Desktop.

 
In QBO, you have to manually enter the amount on the Credit Applied column when paying bills. Here’s how:

1. Go to the Plus icon and select Pay Bills.
2. Choose a Payment account and enter Payment date.
3. Select the transaction from the list.
4. Click the box under the Credit Applied column and enter the amount of the vendor credit. 
5. Hit Save and close.

While in QuickBooks Desktop, you need to click the Set Credits button to apply the credit to the bill transaction. Let me show you how:

1. Go to the Vendors menu and select Pay Bills.
2. Select the bill from the list.
3. You can see the vendor’s available credits from the Discount & Credit Information For Highlighted Bill. Click the Set Credits button to apply it to the bill and hit Done.
4. Click Pay Selected Bills.

Here are helpful articles for your reference:

• Applying vendor credits.
• Transfer and apply credit from one vendor to another in QuickBooks Desktop.

That should answer your concern for today. Let me know what else I can do for you, I'm more than happy to help. Thanks for dropping by, and take care!

I ran across this thread because I had the same problem: I needed to apply a check received form a vendor for a refund. (insurance again).

So I did the natural thing: I created a vendor credit, then a bank deposit, and assumed I could apply the deposit to a credit.

It was not until I found the response from KhimG from 11/29/2018, that I resolved my problem.

This solution seems SO convoluted, AND so much more difficult than it is in Quickbooks Desktop. It makes no sense that I have to create a check, in order to apply a deposit to an existing credit. This create a third (unnecessary) transaction that is not present in Desktop, at least from my recollection.

And it makes me furious that my CPA convinced me to switch to online, and it is quite a process to switch back, which I tried once without success, but will do in the near future.

But thank you KhimG for the solution.

Quickbooks Desktop

When I do this there is still a negative balance towards the Vendor. I don't understand how adding a credit then paying the "bill" balances the account. The bill pmt- check shows a $0.00 debit twice and does not solve the issue.

Received a bill for a Vendor for a service we later decided we did not want to use but we had already paid the bill via check. So the Vendors balance was $0.00 because it all washed out but when adding the check we received back from the vendor and creating a deposit it now credits a balance. 

What am I doing wrong??

Thanks for providing a screenshot, @bfinfrock.

Just to verify, did you filter the report by name? If so, the deposit you've entered doesn't have a name on the Register. This will only show the credit side of the deposit on the report causing it to have a negative balance. If this is the case, open the bank register and enter a name for that deposit.

Here's how:

1. Go to the Company menu at the top.
2. Pick Chart of Accounts.
3. Double-click the bank to open the Register.
4. Locate the deposit and enter a name.
5. Hit Record, then Yes.

Once done, go back to the report, and the balance should be zeroed out.

I'm also including this article for additional resources: Record a vendor refund in QuickBooks Desktop.

That should do the trick. Keep me posted on how everything goes in the comment. I'll be here if you have any follow-up questions. Have a great weekend.

I followed your steps how to enter a refund from a vendor (https://quickbooks.intuit.com/learn-support/en-us/vendor-credits/enter-a-credit-from-a-vendor/00/185...)_ and it worked. But I was forced to do a bank deposit, even though I received a check. I basically booked the deposit in QBO before actually depositing the check at the bank.

What if the vendor sent me a check? I tried to use undeposited funds instead but QBO didn't let me.

Thanks

Sascha

Hi @SBCondor,

Let me jump in on this thread to share some insights about the process of recording a vendor refund.

Regardless if you deposited to your bank account first or recorded it in your QuickBooks Online company then deposited the check to your bank account, it would still be fine. As long as you deposit it in the correct bank account, then your records will remain accurate.

With regards to the Undeposited Funds account, it's normal operation is holding the payments you received that you haven't deposited to a bank account yet. This explains why it doesn't appear as an option when you do a bank deposit.

You'll find this article useful since it has the steps on how you can enter a refund from a vendor. The process is divided into 3 parts which are, enter a vendor credit, deposit the money you got from the refund, then using Pay Bills to connect the bank deposit to the vendor credit.

You're always welcome to post in the comments below if you have other questions. I'll be sure to get back to you.

Hi Ryan.

Thank you for the reply. I understand all that, thank you. But I don't want to do a bank deposit yet. So that posted article doesn't apply to me. How do I record a refund check receipt that is still laying on my desk, which I have not deposited at the bank yet? As a general rule I never record anything in QuickBooks that hasn’t already happened.

Thanks,

Sascha

Thanks for getting back to us, SBCondor.

Since you don't want to make a deposit yet, you can create a journal entry (JE) instead. Debit to Undeposited Funds (UF) and Credit to Accounts Payable. This way, the refund will go the UF account and not in your actual bank.

However, I suggest consulting your accountant for further assistance with the process to ensure your books are accurate for your business.

Here's how:

1. Click the Plus icon to get to the Journal Entry.
2. Enter the necessary information.
3. Once done, hit Save and close.

For additional information, consider checking out these articles:

• Create a journal entry.
• Enter a refund from a vendor.

Please leave a comment on this thread if you have any other issues or concerns. I'll be here to help. Have a wonderful day!

Hello, I am trying to deposit a refund check from a vendor who over charged our credit card and then mailed a paper check to us for that amount. 

Following the steps on https://quickbooks.intuit.com/learn-support/en-us/refund-payments/record-a-vendor-refund-in-quickboo...

I 1) Created a deposit of the vendor check 

2) Created a bill credit 

I am unable to complete step 3 because I only have the bill credit for the vendor in the system and negative amounts do not populate in the "pay bill" screen. We will never write a check for the vendor so I don't want the credit sitting around. I also want to make sure the deposit is linked to the bill credit so it can reflect on job costing. 

I am using Quickbooks Enterprise: Contractor 19.0 Desktop