How to create credit memos and refund receipts in QuickBooks Online
Use a Credit Memo to record credits given to customers. Credit memos reduce your customer’s balance due on an existing or future invoice.
Use refund receipts to record refunds paid to customers. This is useful if the customer does not owe you anything and you have no accounts receivable balance against which to record a credit.
When creating a credit memo or refund receipt:
- Select the appropriate Product/Service for which the customer is being refunded or given a credit.
- Use an appropriate Date for the credit memo or refund receipt (sometimes the default date that prefills for you isn’t the one to use).
- Record the Description, Quantity, Rate, Amount and Tax fields as appropriate.
- Decide to Save and Close, Save and new, or Save and send the credit memo or refund receipt to the customer. Sending it notifies the customer that a credit memo or refund receipt has been created.
After recording a credit memo, if the Account and Settings are such that credits are automatically applied, QuickBooks Online automatically applies it to the oldest balance due for that customer. If you don’t want the credit memo to be applied in this manner (but you like the setting to apply credits automatically otherwise), you’ll have to:
- Navigate to the customer’s profile.
- Open the Receive Payment transaction where the credit memo was automatically applied. You can also get to this by opening the original credit memo and clicking the blue Payment link in the upper right-hand corner of the Credit Memo screen under the word Paid.
- The total of this Receive Payment transaction is for $0.00, which means this transaction is simply applying the amount of the credit memo against an invoice. Therefore, delete this Receive Payment transaction to make the credit memo unapplied.
- Navigate back to the customer’s profile.
- Open the later invoice against which you want to apply the credit memo.
- Choose the action to Receive Payment against the invoice.
- Click the Credit Memo line at the bottom of the sales transaction applying the credit. Keep the total amount of this new Receive Payment transaction $0.00.
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