Invoice to a vendor is paid twice by mistake. Vendor issued a credit note and paid the amount back. How it should be recorded in Quickbooks online?

Recording a vendor credit can be challenging, Clio. Rest assured, I'm here to help you record these transactions accurately

Since your situation involves duplicate vendor payment, a credit note, and a refund, here's a structured way to handle each step, including linking the bank transactions.

Step 1. Record the Duplicate Payment: 

1. Enter the vendor Bill as usual for the initial payment. 
2. Record the second, mistaken payment by creating an Expense or Check transaction for the vendor, making sure it links to your Accounts Payable account. This keeps it as a payable entry on your balance sheet,  

Step 2. Record the Credit Note from the Vendor: 

1. Go to the +New icon, then select Suppliers Credit to enter the credit note details. 
2. Make sure to select the same Accounts Payable account and vendor that you used for the duplicate payment. 

Step 3. Record the Refund from the Vendor: 

1. Click the +New icon, then choose Bank Deposit and record the amount refunded by the vendor. 
2. For the account, choose Accounts Payable, and make sure it's assigned to the correct vendor. 

Step 4. Link Transactions and Reconcile Bank Feed: 

1. Click the +New icon, then select Pay Bills and select the vendor. 
2. Apply the Vendor Credit against the duplicate payments to offset it. 
3. Then, apply the Bank Deposit (the refund) to close out any remaining balance. 

When reviewing your bank feed, you'll see both the duplicate payment and the vendor refund. These should be linked to the recorded transactions, so you can categorise them correctly and keep your reconciliation accurate. 

If you have further questions about recording these transactions, please don't hesitate to ask. Keep safe, 

Thank you for the reply, RogelioL.
I tried to follow the procedure you proposed, but have stuck on Step 2.
When I try to save Supplier Credit, I get the message: You can't use an Accounts Payable account on the detail portion of a Supplier Credit.

What am I doing wrong?

Your efforts in performing the suggested resolution is valued, Clio. I'll be here to ensure you'll be able to save the supplier credit successfully. Let me share some information first to provide context and help you understand the process better. 

QuickBooks Online (QBO) restricts the direct use of an Accounts Payable (A/P) account in a Supplier Credit transaction. The reason for this is A/P is specifically designed to monitor unpaid bills or invoices you're obligated to pay. On the other hand, a Supplier Credit transaction represents money you owe, which can be applied to reduce the amount you owe on future invoices or bills from the same vendor. These two functions serve different purposes in tracking your financial obligations.
 

In line with situation, you'll need to use the same account as the one you utilized when you recorded the associated bill. I'll add an image for visual references.  
 

Finally, you can refer to these articles for insights on pulling up financial data with your supplier totals and handling any prior balance you need to pay:

• Run a report with supplier totals in QuickBooks Online
• Manage outstanding balances for suppliers in QuickBooks Online

Come back to this post if you have more questions about processing vendor-related topics, Clio. I'll be here to ensure you can get help you deserve. Whether you're dealing with complex supplier transactions, managing multiple suppliers, trying to optimize your account payable process, don't hesitate to share them in the comments section below.

Hello Erika,
Thank you for your reply and attempt to help me with this.
I'm afraid I still didn't manage to resolve this, in spite your explanation.

This is where I am now:
- Duplicate payment done on 15.01. recorded as Expense with category A/P

- Supplier Credit created with the same date (15.01.) with the category same as for the original invoice we paid

- Bank Deposit created on the date when the vendor paid back the money (05.02.) using account A/P

Is this ok, and how should I proceed?

You did a great job following the procedures advised by the previous support to record the vendor credit, @Clio1616. I'll add the last steps so you can complete your task.

The last step is to link the transactions and reconcile bank feed. 
 

1. Click the + New icon, select Pay bills, then choose the vendor.
2. Apply the Vendor Credit against the duplicate payments to offset it.
3. Lastly, apply the Bank Deposits (the refund) to close out any remaining balance.

Additionally, you can categorise the transactions correctly and reconcile them to ensure accuracy.

If you need further clarifications about the process, please let me know. I'm always here to help.

Hello @ShangY,
Thank for the response.
But please clarify. When you say "+New, then select Vendor " I'm not sure what do you think of. I'm sharing what options I have when click on +New.
Which one to choose?

You're on the right track, Clio. I'm happy to clarify the steps to get you started.

Different regions use varying terminology. When my colleague mentioned clicking on + New, she was referring to the Vendor credit option under the Vendors category, this is the term used for users in the United States (US).

For users outside the U.S., the equivalent term is Supplier credit. Therefore, after you click the + New button, select Supplier Credit under the Suppliers category.

Review this link for in-depth information on recording a refund or credit: Enter supplier credits and refunds in QuickBooks Online.

You can also use these resources to track all money paid to a supplier for the year and manage outstanding supplier balances:

• Run a report with supplier totals in QuickBooks Online.
• Manage outstanding balances for customers and suppliers in QuickBooks Online.

If you have further questions about working with supplier and customer credits, please don't hesitate to ask here in the Community. I will respond to you promptly.

Hello Jelayca V,
Thanks.

But this is not what was bothering me.
I do not get what to connect with what and how.
This is situation 2, but the same problem.
We had made advanced payment to a hotel .
The total of final invoices was less because less nights spent there.
They paid us back more paid part of advance.

So, I have expense that is not closed for amount of 360.60 EUR (advance booked on A/P).
I create a credit note with the description as for other invoices related to that payment.
And then what?
How to close that credit note?
Whit what and how I close the expense?
Whit what I should connect transaction (payment back of 360.60 EUR) from the Bank feed?

You’ve come to the right place for assistance with your reporting needs, Clio. I'm eager to guide you and resolve the credit note concern to ensure everything goes smoothly.

Since the vendor overpaid you, you need to record this as supplier credit and then apply this to their future bills. This is the perfect way to close the vendor credit.

Here's how:

1. First, click on + New and then select Supplier credit.
2. In the Supplier dropdown, choose your supplier.
3. Depending on how you manage purchases with this supplier, you’ll need to fill in either the Category or Item details.
4. Make sure to select Save and Close when you finish.

Afterward, you should create a bank deposit and record the amount in the Accounts Payable category.

Here's how:

1. Start by selecting + New, then go for Bank deposit.
2. In the Account dropdown, choose the account that got the refund. In the Add funds to this deposit area.
3. For Received from, select the supplier who refunded you.
4. In the Account section, pick Accounts Payable to connect the refund to the supplier credit.
5. For the Payment method, type in how the supplier refunded you. Enter the refund amount and click Save and Close.

After that, let's use the Pay Bills feature to connect the bank deposit with the supplier credit.

1. Press the + New and click the Pay bills.
2. Pick the bank deposit you just made. You’ll find the supplier credit amount listed in the Credit Applied area. The Total payment should read $0.00.
3. Choose Save and Close.

Once done, you can pair the bank transaction with the manually entered bank deposit using the Find Match tool in QuickBooks Online.

Additionally, you can check out these articles for tips on how to gather financial data with your supplier totals and manage any outstanding balances you need to settle:

• Manage outstanding balances for customers and suppliers in QuickBooks Online
• Use reports to track cash flow in QuickBooks Online

Come back anytime if you have more questions about vendor transactions, Clio. I’m here to make sure you get the assistance you deserve. I'll reply to you in no time.

Dear Christine, 
Thank you very much.

I followed your steps, and all is connected fine now, I think.
The only thing still bothers me is Open balance that still remained. Did I miss something?

How should I "close" the Expense record? Please check the screenshots.

I appreciate you for making it this far, Clio. Let's collaborate to resolve your remaining balance once and for all.

Based on your screenshot, it looks like a duplicate entry was recorded. It also appears you've already closed the credit note or supplier credit after creating a bank deposit and using the Pay Bills feature following the recommended steps provided by my colleague.

Since you already had an expense transaction before this, following the steps to create another is the reason behind the remaining balance. That said, we can void or delete the entry that wasn't linked to the bank deposit to clear things up. 

Here's how you can do it:

1. Head to the Expenses menu, then Suppliers.
2. In the All Transaction dropdown, select Expense. 
3. Click the expense transaction. 
4. Hit More, then Void or Delete.

Moreover, I'm adding these additional resources to help reconcile your account seamlessly after categorising and matching your transactions:

• Learn the reconciliation workflow in QuickBooks
• Reconcile an account
• Fix issues the first time you reconcile an account

Maintaining accurate records is crucial for your business's success. If you have further questions or need more assistance managing and recording your bank transactions, I'm here to help.

Hello ShyMae,
Ok. I tried to void the Expense record as you suggested, but that way the transaction from the bank feed unmatched and appear again in a bank feed.
I don't know with what to mach that transaction then.
Any suggestion?

You can exclude the transaction or match it to the bank deposit you created in QuickBooks Online (QBO), @Clio1616. I'm here to help you with the process.

Since everything is recorded manually in the program and the transaction is already a duplicate entry, you can exclude it from the bank feed. Doing so prevents the system from downloading it again.

Here's how:

1. Go to Transactions and select Bank Transactions.
2. Click the For Review tab.
3. Locate the transaction and tick the checkbox.
4. Select Exclude.
   

    

Alternatively, you can match it to the bank deposit you created to close the credit note.

Furthermore, you'll want to create bank rules in QBO so the system will automatically categorise downloaded transactions into their appropriate accounts.

Our dedicated team is always available to extend our help if you have other questions about handling supplier credits. You can join us again in this thread, and we'll promptly answer your questions. Have a great rest of the day.