How to record a refund from vendor

Hello there. I'm here to help you record a vendor refund in QuickBooks Online (QBO).

In QBO, the process of recording the refund depends on how you enter the purchases. You can refer to the following steps below that apply.

If you use an expense or cheque to track your expenses. Here's how to track the refund:

1. Ensure you have already created the initial expense or cheque in QBO and assigned a Category/Account to it.
2. Next, select + New and then choose Bank Deposit.
3. Then, go to the Add funds to this deposit section:
   • Input the amount refunded by the supplier and choose the Category/Account that you selected on the initial expense or cheque.
   • If this is an expense that you assigned to a customer or project, click the Track returns for customer checkbox, then select the customer or project. That will ensure that your costs will not be overstated.
4. Add them in the Select the payments included in this deposit section if you deposited customer payments for invoices into the bank account along with the supplier refund.

If you enter bills to track your purchases. Follow these steps to record the refund. This ensures the credit hits the expense account you use for this vendor.

1. Create a supplier credit by going to the + New menu and choosing Supplier credit or Receive supplier credit.
2. Next, in the Supplier dropdown, pick the vendor's name.
3. Depending on how you record purchases with this supplier, enter the Category details or Item details. Usually, this is the category, product, or service you’re getting credit for.
4. Once done, select Save and Close.
5. After that, apply the credit toward any open or future bill. When you’re ready to use the credit, here’s how to do it.
6. Go back to the + New button and select Pay bills or Pay Bill.
7. Pick a bill for your supplier from the list. You'll see the available credit with this supplier in the Credit Applied field.
8. Complete the rest of the fields like you normally do.

For reference, check out this article: Enter supplier credits and refunds in QuickBooks Online.

I'm always here ready to lend a hand if you have other concerns recording vendor refunds in QBO. Have a good one and stay safe. 

Hello ,

I would like to know if I followed the 1st steps, bank deposit, the transaction isn't reflection under supplier account that the vendor is refunded the amount.

Thank you for joining the conversation, @CG18011994.

I'm here to address your question regarding the steps provided by the previous representative.

If you have followed the previous steps, it is important to use the same account that the vendor refunded the amount to in order to ensure that the bank deposit shows on the supplier's account.

I'll be sharing this article on how to record your customer refund based on various scenarios: Record a customer refund or supplier refund in QuickBooks Online.

Some customers prefer receiving a credit note that they can use to reduce the balance on their next invoice. For information on how to handle this scenario in QuickBooks, please visit this link: Create and apply credit notes or delayed credits in QuickBooks Online.

Let us know if you need more assistance managing refunds to customers. Add more details by clicking the Reply option, and we'll be sure to get back to you.