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Level 2

Credit note unapplied, impossible to apply

Hi, i have two questions in one

I sell diving trips.

1- Customers pay prior to the dives. Sometimes they come back and didnt do the whole trip (one dive instead of two for example). We propose them to refund a part of the service through a bank transfer. I create a credit note on the right customer and invoice and save and close as said in other topics. The problem is that the credit note stays as "unnaplied" and i can't apply a transaction out of my bank account that would be linked to that credit note. What am i doing wrong?


2- I use the refund option in the + menu on the header. I can select my bank account for the paiement. But now i have an issue as the refund has been rejected from their bank and went back to my bank account (minus bank wire transfer fee). How can i make part of the refund go back to our bank account and deduce bank fee from it. I still want to make a new credit note with the new amount and be able to apply it and link it to our bank account when we transfer it again to our customer. How can i do?

THanks and sorry for that long and unclear problem.





3 Comments 3

Credit note unapplied, impossible to apply

The scenarios you gave look pretty clear to me, Roman. I got these covered for you.


I'll give my answers per scenario. So for the first one, the credit note remained unapplied because the amount of the invoice does not match with it. To fix this, you can create a cheque for the amount part of the service.


Here's how:

  1. Click the Plus icon, and then select Cheque.
  2. Enter the customer's name.
  3. Select the Payment Account.
  4. Under Category details, select Accounts Receivable.
  5. Enter the amount that you need to refund.
  6. Click Save and close.

Once done, you'll have to zero out the amount by applying the check to the invoice payment and credit note.


Like this:

  1. Click the Plus icon.
  2. Under Customers, select Receive Payment.
  3. Enter the customer's name.
  4. Under Outstanding Transactions, check the box for Cheque Expense.
  5. Under Credits, check the box for Adjustment Note.
  6. Notice the amount at the top is zero.
  7. Click Save and close.
  8. Go back to the transaction list to see that the credit note's status is closed.

For the second scenario, you don't need to create a refund. You can simply enter a bank deposit and use two accounts; one for the refund amount and a negative amount for the wire transfer fee. 


Here's how:

  1. Click the Plus icon.
  2. Under Other, select Bank Deposit.
  3. Under Add funds to this deposit, enter the customer's name, account of the refund, and then amount.
  4. On the next line item, enter/set up an account for the wire transfer fee.
  5. Click Save and close.

Of course, I would highly recommend that you consult an accountant. They might have other ways to record this transaction in QBO.


If there's a question that you want to ask, please feel free to do so. I'll explain my answers further if something looks confusing to you.

Level 2

Credit note unapplied, impossible to apply

thanks to your help i understand better how credit note works and you perfectly answered my first question.

For the second senario If i follow you and use the bank deposit with two lines one to receive from my customer the refund that has been rejected from my bank and second line my bank fees that i subtract to that initial amount. It gives me indeed the right amount going back to my bank account and allow me to reconcile it. I still have two issues with that method.

1- For the first line of my bank deposit. The balance on my customer invoice is not impacted with that rejection. The credit note stays in close status and is paid. I thought that the amount i recieve through the bank deposit from my customer would modify the balance and warn me on the invoice that i owe him that amount again. how can i work this out?

2- The second line where i enter the bank fees (my bank is MANDIRI) in negative don't appear in my MANDIRI supplier expenses. It means i can't track this expenses. How can i work this out?


Sorry to bother you with more problem you are really helpfull so far. Thanks for your precious time again



Credit note unapplied, impossible to apply

Hi Reeflexdivers,


Creating a refund receipt was a good step to record the money you returned to your customer. Let's go to your deposit for the bounced wire transfer money, and continue from there.


On your deposit (returned money), you will use the Accounts Receivable account on the first line. Then, tag your customer’s name in the RECEIVED FROM field, so it will be turned as a credit on the customer's end. When you return them that money, you can create a cheque or expense. Then, use the Accounts Receivable account in the CATEGORY field.

Lastly, you can create a Receive Payment transaction to link the Deposit and the Cheque. This will close the unapplied deposit in the customer’s profile.


About the wire transfer fee, if it's showing as a separate transaction on your bank account, you will not include it on your deposit. Instead, you'll create a separate expense transaction for it. Then, edit your deposit, remove the second line for the fee, and just enter the deposit amount on the first line as it is.


You can always visit us back here when you have other questions.