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Create and apply credit notes or delayed credits in QuickBooks Online

by Intuit•28• Updated 2 weeks ago

Instead of a refund, some customers prefer getting a credit note they can use to reduce the balance on their next invoice.

There are a few ways to handle credit notes in QuickBooks. You can:

Create a credit note to immediately reduce a customer's current balance.
Or, enter a delayed credit so they can use it in the future.

Here's more about the differences and how to apply them to customer transactions.

Note: If your customer simply wants a refund, here's how to return your customer's payment.

Learn the differences between credit notes and delayed credits

In QuickBooks, you can give credit using a credit note or delayed credit. Here are the key differences:

Credit note

If your customer wants to immediately reduce their current open balance, use a credit note.
Your customer can use their credit note as payment for an invoice, either partially or in full.
You can apply a credit note when recording payment for a customer’s invoice.
Credit notes impact sales reports, even if you don't apply them to invoices.

Delayed credit

If you want to track a customer's credit for future use, without it immediately affecting their current open balance, use a delayed credit.
Your customer can use their delayed credit to reduce the balance of an invoice.
You can add delayed credits to future invoices as a line item.
Unlike credit notes, delayed credits don't impact sales reports until they’re applied to invoices.

Create and apply a credit note

Step 1: Create a credit note

Select + New.
Select Credit note.
From the Customer dropdown, select the customer's name.
Enter the credit note details, such as the date and the amount.
Tip: You can create a custom credit service item so you can quickly add it to credit notes as a single line item.
When you're done, select Save and close.

Note: If your customer has returned stock and you wish to update your quantity on hand, input the product as a line item within the credit note.

Step 2: Apply the credit note to an invoice

Select + New.
Select Receive payment.
From the Customer dropdown, select the customer.
In the Outstanding Transactions section, select the open invoice you want to apply the credit note to.
In the Credits section, select the credit notes you want to apply.
Note: You won't see the credits section if you have not created the credit note.
For the open invoice in the Payment column, enter how much of the credit you want to apply.
Leave the Payment method, Reference no, Deposit to, and Amount received fields blank.
Fill out the rest of the form, including the Payment date.
Make sure the total is correct after applying the credit note.
When you're done, select Save and close.

Create and apply a delayed credit

Step 1: Create a delayed credit

Select + New.
Select Delayed credit.
From the Customer dropdown, select the customer's name.
Enter the details, such as the date and the amount.
Tip: You can create a custom credit service item so you can quickly add it to delayed credits as a single line item.
When you're done, select Save and close.

This saves the delayed credit. You can choose to apply it the next time you invoice the customer.

Step 2: Apply the delayed credit to an invoice

Keep in mind that adding a delayed credit to an invoice from a prior accounting period will affect that period's balances.

Select + New.
Select Invoice.
From the Customer dropdown, select the customer. This opens a window with all open transactions for the customer, including invoices and delayed credits.
Note: If you don't see this, select the small arrow next to the invoice Balance Due.
Find the delayed credit and select Add. This adds the credit as a line item to the invoice.
Fill out the rest of the invoice as needed.
When you're done, select Save and close.

Credit note customisation

To customise a credit note, edit the Standard template according to your needs. Any changes made to the Standard template will be picked up by the credit note.

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