Enter vendor credits and refunds in QuickBooks Online

How you enter the refund depends on how you record your purchases. Choose the section below that applies to you. If you’re not sure, ask your accountant. Or, we can help you find a ProAdvisor.

Vendor credits and refunds record money returned to your business by a vendor. You can enter these transactions in QuickBooks Online to ensure your expense records are accurate and your bank balance is correct. The method you use depends on how you originally recorded the purchase.

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Option 1: Record a refund for expenses or checks

Use this method if you recorded the original purchase as an expense or check (not a bill).

1. Select + Create.
2. Select Bank deposit.
3. In the Add funds to this deposit section, enter the following details:
   • Received From: Select the vendor who issued the refund.
   • Account: Select the same Category/Account used for the original expense.
   • Amount: Enter the refund amount.
4. (Optional) If the refund relates to a customer or project:
   • Select the Track returns for customers checkbox.
   • Select the specific Customer/Project.
5. (Optional) If you are depositing other payments with this refund, select them in the Select the payments included in this deposit section.
6. Select Save and close.

Option 2: Record a vendor credit for bills

Use this method if you track expenses using bills and plan to apply the credit to future payments.

Step 1: Create a vendor credit

1. Select + Create.
2. Select Vendor credit.
3. In the Vendor ▼ dropdown, select the vendor.
4. Enter the Category or Item details for the credit.
5. Select Save and close.

Note: If you select an inventory item, QuickBooks will put it back into inventory. If the item is defective or if you don’t want it added back to inventory, you can make an inventory adjustment.

Step 2: Apply the credit to a bill

1. Select + Create.
2. Select Pay bills.
3. Select the bill you want to pay.
   Note: QuickBooks automatically applies the available credit to the bill.
4. Verify the Credit Applied amount.
5. Select Save and close.

Option 3: Record a refund for a paid bill

Use this method if a vendor sends you a refund check for a bill you have already paid.

Step 1: Create a vendor credit

1. Select + Create.
2. Select Vendor credit.
3. In the Vendor ▼ dropdown, select the vendor.
4. Enter the Category or Item details matching the original bill.
5. Select Save and close.

Step 2: Deposit the refund

1. Select + Create.
2. Select Bank deposit.
3. In the Add funds to this deposit section, enter the following details:
   • Received From: Select the vendor.
   • Account: Select Accounts Payable (A/P).
     Important: You must select Accounts Payable (A/P) to link the deposit to the vendor credit.
   • Payment Method: Enter the method (for example, Check).
   • Amount: Enter the refund amount.
4. Select Save and close.

Step 3: Link the deposit to the vendor credit

1. Select + Create.
2. Select Pay bills.
3. Select the Bank Deposit you just created.
4. Verify that the Credit Applied matches the deposit amount and the Total payment is US $0.00.
5. Select Save and close.

Record a refund to a credit card

Use this method if a vendor refunds a purchase directly to your credit card.

1. Select + Create.
2. Select Credit card credit.
3. In the Payee field, select the vendor.
4. In the Bank/Credit account ▼ dropdown, select the credit card account.
5. Enter the Payment Date, Amount, Tax, and Category. Note: The category must match the original expense account.
6. Select Save and close.