Series
We have several posts here at Begin Coding Now that are on QuickBooks Online that are grouped into Series. Click the previous link to see the list.
In QuickBooks Online, what’s the best way to refund a customer invoice that has already been paid? So your customer has received your services, received your invoice for those services and has paid the invoice in full. Now you need to refund the customer.
You cannot simply make a refund receipt. And that’s because if you do that, you will not have a record of the refund in the customer’s account balance. I assume that all customers will want to see this.
There are several steps to this process.
- Make a credit memo for the customer.
- Write a cheque for the customer and send it out to them. The amount is the amount of the credit memo.
- Use the Receive Payments window to “apply’ the cheque to the credit memo. Then the two of them cancel each other out regarding the customer’s balance. And then everyone has all the documentation that they need.
From an accounting perspective, what happened? With the original invoice, income went up (a credit) and accounts receivable went up (a debit). When we issue a credit memo, we do the opposite. Income goes down (a debit) and AR goes down (a credit). The customer records are also affected. The next thing is to issue a refund cheque. Remember that in this example, the customer has already paid, se we must give them back their money. The next step is to apply the cheque to the credit memo.
Credit Memo
Click + New, credit memo,
Click + New, Cheque.
The Open Invoices report (part of it) is shown below.
Both ourselves and the customer can see that the credit memo and the cheque cancel each other out (in dollars). The last step is to apply the credit memo to the refund cheque. We do this by making a “zero dollar payment”.
Go to + New, Receive payment.
After we click Save and close we will notice that in the Open Invoices report, both the cheque and the credit memo have been removed. Good.
After everything is done in the post, this is what the credit memo looks like. I can run the report Transaction List by Customer and focus on Betty. If I click the credit memo 17, this below is what I see.
