Transferring Vendor Credit to Bank Account

Hello, BadCo55. 

Let me share some information on how you can manage your PayPal account in QuickBooks Online.

A vendor Credit is used to either record returns to vendors or simply these are refunds from vendors.

Let's make sure to create a Vendor Credit to post it on the expense account you used for this vendor. Then, deposit the money you got from the refund using a Bank Deposit. Lastly, use the Pay Bills option to connect the bank deposit to the Vendor Credit. 

Here's how:

Step 1: Enter a vendor credit

This makes sure the credit hits the expense account you use for this vendor.

1. Select + New.
2. Select Vendor credit or Receive vendor credit.
3. In the Vendor dropdown, select your vendor.
4. Depending on how you record purchases with this vendor, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting a credit for.
5. Select Save and close.

Step 2: Deposit the money you got from the refund

1. Select + New.
2. Select Bank Deposit.
3. In the Account drop-down menu, select the account where you got the refund.
4. In the Add funds to this deposit section, fill out the following fields.
   • Received from: Select the vendor who gave you a refund.
   • Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.
   • Payment method: Enter the method your vendor used to refund you.
   • Amount: Enter the amount of your refund.
5. Select Save and close.

Step 3: Use Pay Bills to connect the bank deposit to the vendor credit

Even though you aren’t paying a bill, this is the right thing to do. This last step is to keep your vendor expenses accurate.

1. Select + New.
2. Select Pay Bills.
3. Select the bank deposit you just created. You’ll see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.
4. Select Save and close.

Then, you can go to your vendor profile to check for the balance. 

For your reference, you'll want to run reports in QuickBooks Online to show the aspects of your business. Here's an article for your guide: Run Reports In QuickBooks Online.

I'll be right here to help you if you have any other questions or concerns with QuickBooks. I'll make sure you're all set. Have a lovely day!

That's super helpful, thanks for the response. 

What if the transactions for the 'deposit' already exist in my transaction history? 

Hello, BadCo55!

I’m glad to hear you found LeizylM’s answer helpful! I'll continue to help you with your additional question.

Since the transaction is already in your history, you can skip Step 2 in LeizylM's answer. Then, edit the transaction in the PayPal history by changing its category to Accounts Payable. Then, perform Step 3 above to link it to the vendor credit.

See also about reconciling an account in QBO for your reference in the future.

Let me know if you have questions as you change the category or link the transactions. Take care and more power to your business.

Thank you for this helpful article. I don't see the 'Bank Deposit' in my 'Pay Bills' screen. What am I doing wrong?

Thanks for reaching out to the Community. I greatly value your efforts in following the steps provided by my colleague, @Controller01. Let me help you find your bank deposit in QuickBooks Online (QBO).

Kindly verify that the account you used in your bank deposit is Accounts Payable. This will make the bank deposit transaction appear in the Pay Bills screen.

I've included some relevant articles that you can use to manage bank transactions in QBO moving forward:

• Categorize and match online bank transactions in QuickBooks Online
• Reconcile an account in QuickBooks Online

Please let me know if you need further assistance managing your transactions in QuickBooks Online. The Community is always willing to assist you anytime. Have a wonderful day!

That's what my mistake was. Thank you SirielJeaB for your help!

I am happy my colleagues were able to assist you, Controller01! If you have any other questions, don't hesitate to contact us! Bye for now. 

What if the deposit doesn’t show up in the pay bill feature to link the credit to it. Only bills show up on bill pay not deposits. 

It's great to have your query here today, Lala Lala2121. I'll provide further details when recording vendor returns in your company file so you can manage your expenses accordingly.

When entering refunds from a vendor, creating a Bank Deposit with an associated Accounts Payable (A/P) account will allow the credits to link to your future or existing bills under the Pay Bills page. With that, deposits you've created won't really show up since these credits will then be link to your entries.

Once done, you can go to your vendor profile to check for the balance. 

Moreover, I'll include this reference to help you review your accounts to ensure recording in your books and financial statements are accurate: Reconcile an account in QuickBooks Online.

Feel free to leave a comment on this thread for any additional queries when managing refunds and deposits in your account. I'll be around to help. Stay safe!

I have the 2019 edition of QuickBooks, and no I don't want to upgrade! Looking for a walkthrough tutorial or help in applying a credit to my bank account.

Hi there, KER. I understand you don't want to upgrade your QuickBooks Desktop (QBDT) account. You can click the Vendor credit radio button on the billing page of your account. Let me walk you through the process of how to do it.

Firstly, you'll need to record a Bank Deposit and assign it to your Accounts Payable account. This will allow you to link your future or existing bills under the Pay Bills page.

Here's how:

1. Click on the Banking menu at the top of the screen, then choose Make Deposits.
2. If the Payments to Deposit window pops up, choose the payment you want to record. Then, click OK.
3. In the Make Deposits window, use the dropdown menu next to Received From to select the vendor who issued the refund.
4. From the From Account dropdown, choose the relevant Accounts Payable account.
5. In the Amount column, input the exact amount of the vendor's check.
6. Click on Save & Close to finalize the transaction.

Once done, proceed to record a bill for the refund amount in your account.

Here's how:

1. Go to the Vendors menu and click on Enter Bills.
2. Choose the Credit option to record the return of goods.
3. Choose the vendor's name on the dropdown button.
4. Click on the Expenses tab and enter the accounts referenced in the original bill.
5. In the Amount column, specify the correct amount for each account.
6. Once you've completed the entries, click on Save and Close.

Furthermore, if you have a different scenario in recording a vendor credit, you can refer to our article for detailed steps on how to record it.

Additionally, once you’re ready, I recommend reconciling your account to ensure that your records align with your actual bank and credit card statements in QuickBooks. This step is crucial for maintaining accurate financial records.

If you have any more questions or need assistance with managing your vendor credit, don’t hesitate to get in touch. I'm here to help.