How do you allocate a deposit for a refund of an overpayment to a supplier account?

georgie3 · ‎November 14, 2025

An overpayment was made to a supplier so a balance is showing as owing from said supplier. However, a refund of the overpaid amount has now been made from the supplier. If I add this as a deposit and allocate it to the supplier, it does not show on the suppliers account and still shows that fuds are owed back from them. How do I rectify this?

AntoniettaE

Thanks for dropping by the Community space, Georgie3.

If the overpayment has been recorded properly, you can create a bank deposit to link the refund to the supplier's credit using Pay Bills. Let me guide you through the process.

First, deposit the money you got from the supplier. Here's how:

Select Create and click Bank deposit.
In the Account dropdown, select the account where you got the refund.
In the Add funds to this deposit section, select the supplier who gave you a refund.
In the Account section, select the Creditors account so you can tie the refund to the supplier's credit.
Enter the payment method your supplier used to refund you, and the amount
Select Save and close.

After that, you can use Pay Bills to connect the bank deposit to the supplier credit. Here's how:

Select Create and click Pay bills.
Select the bank deposit you just created. You’ll see the amount of the supplier's credit in the Credit Applied field. The TOTAL PAYMENT AMOUNT should be GBP £ 0.00.
Select Save and close.

For more detailed instructions, you can refer to this article: Handle supplier refunds and credits in QuickBooks Online.

If you have further questions or need additional assistance, feel free to let us know. We’re here to help.