Explaining How to Record a Refund to Customer in QuickBooks and QBO

Explaining How to Record a Refund to Customer in QuickBooks and QBO

When orders are canceled or products are returned, an amount is refunded to a customer. QuickBooks is one of the software solutions that can be used for recording the refund amount. You can learn how to record a refund to a customer in QuickBooks by using its Create option. In versions of the Intuit software like QuickBooks Online, a refund receipt or a credit memo can be utilized. By applying a similar way, credit card refunds made to your customers can also be recorded or entered in QuickBooks. 

For more guidance, please check the contents of this blog. We have elaborated on the methods to record a refund or credit card refund made to a customer in both QuickBooks and QBO.

Here, you can see an outline of this blog to know its contents:

When Do you Record a Customer Refund in QuickBooks?

There can be 3 main reasons why a customer refund may be given and recorded in QuickBooks.

  • An order may have been prepaid by your customer. However, the same order may have been canceled due to certain reasons.
  • Your customer may want to claim open credits.
  • An amount greater than the cost of the service/product purchase may have been mistakenly paid by your customer. For reimbursing the amount, the refund can be made to the customer. After this, its record can be added.

Irrespective of the situation or reason, the users of QuickBooks can record refunds to customers for maintaining their own track.

Method to Enter a Refund to a Customer in QuickBooks

Your customer may have canceled an order and may now request a refund. After you have made the refund, you can enter it in the QB software by selecting the Create symbol. After selecting it, please choose Check or Expense. Then specify the customer in this case by clicking on Payee. You can now mention the details of the refund along with the product or service with respect to the same.

To know how to record a refund to a customer in QuickBooks, you can follow these instructions:

  • Begin by clicking on “Create”.
  • Now, “Check or Expense” has to be picked.
  • Decide who is the customer the refund is entitled to via “Payee”.
  • Click on “Payment Account”.
  • Tap on “Category”.
  • Opt for “Accounts Receivable”.
  • In “Amount”, type in the amount relating to the refund.
  • In the remaining fields, enter the information needed.
  • The button for “Save and Close” needs to be pressed.
  • For linking this refund amount to your customer’s credit, tap on “Create”.
  • Go to “Receive Payments”.
  • Choose the same customer that was selected in Step 3.
  • In the remaining fields, provide the details.
  • View the section that says “Outstanding Transaction”.
  • Tick the box for “Expense or Check”.
  • In “Open Balance”, mention the same amount as that of the payment.
  • Eventually, you have to hit “Save and Close”.

How to Record a Customer Credit Card Refund in QuickBooks?

When a refund has been given to your customer via a credit card, you can record it in QB using Sales Receipt. This is an option in the accounting software. Once you select it, you can move to the More button. Press it and then navigate to Refund. From this tab, you can tap on the option that says Yes, Refund My Customer. Then you can apply the refund amount to the customer’s invoice as well. 

These directions show more about how to record a customer credit card refund in QuickBooks.

  • First, select “Sales Receipt” in “QuickBooks”.
  • Now, press the “More” button.
  • Choose the “Refund” tab.
  • Ensure that you choose ‘Yes, Refund My Customer”.
  • Click on “Payment”.
  • To refund the amount on the customer’s invoice, you can choose “Payment”.
  • Repeat Step 2.
  • Now, tap on the option of “Refund”.
  • Again, opt for “Yes, Refund My Customer”.

Tip: After recording the refund made via a credit card, you may want to remove it for some reason. You can easily delete a credit card refund in QuickBooks.

How to Record a Customer Refund in QuickBooks Online?

QuickBooks Online lets you enter/record customer refunds with its + New option. The option shows Give Refund or Refund Receipt that enables the process to record the refund. The refund can be added by creating a credit memo as well. Once the memo has been made, a refund receipt can be used to complete the process.

In the online version of QuickBooks, to record a refund to a customer, you can learn the details of these methods below.

Method 1: Recording Your Customer’s Refund Using + New Option

After a product is returned by your customer or a service is not purchased, a refund can be recorded for it in QuickBooks Online. To begin, you can select the option of + New. Make a selection for either Give Refund or Refund Receipt. Then proceed to select Customer. Using the Refund from option, you can continue and supply the information required. This clarifies how to record a refund to your customer in QuickBooks Online.

  • You need to find “+ New” in “QBO” and then use it.
  • Next, head to one of the following options:
    • “Give Refund”
    • “Refund Receipt”
  • The dropdown labeled “Customer” has to be selected.
  • Mention the customer for whom the refund has been made.
  • Now, click on “Refund from”.
  • The bank to which the refund amount has been deposited needs to be selected.
  • View “Product/Service”. In this column, add every product as well as service.
  • Input the following information:
    • “Rate”
    • “Quantity”
    • “Amount”
    • “Service Date”
    • “Tax”

Note: In addition to these fields, you may find others as well. You will be required to fill those fields too.

  • In the end, tap on “Save and Close”

Tip: In addition to adding a customer refund, you can also record a vendor refund in QuickBooks Online. See here the steps to record it.

Method 2: Entering a Customer Refund by Creating a Credit Memo

For clearing the outstanding balance of your customers when the goods have been returned, you can enter the customer refund in QuickBooks Online. To clear this balance, a credit memo needs to be made. With the help of the Create menu, you can opt for Credit Memo. Then mention details like the customer’s name, the concerned product/service, etc. After this, Refund Receipt has to be selected for entering and applying the customer’s refund.

Below, we have explained how to record a customer refund in QuickBooks Online in steps:

  • Choose the button for the “Create” menu.
  • Click on “Credit Memo”.

Note: As an alternative to Steps 1 and 2, you can move to “Sales Transactions”. Then press “New Transaction”. After pressing the button, you can pick “Credit Memo”.

Tip: To know the detailed way to create a credit memo in QuickBooks, you can read here.

  • Choose your customer.
  • Mention the services or products the credit memo is needed for.
  • Enter the information asked at the bottom of the window for “Credit Memo”.
  • Select “Create”.
  • Tap on “(+)” or “Plus”.
  • View the column that states “Customers”.
  • Click on the “Refund Receipt” option.
  • Pick the customer to whom the refund is being provided.
  • Vist “Refund Receipt”, enter the information for the invoice.
  • Choose how the payment is being made.
  • Select one account for sending the payment.
  • Now, opt for “Print Later”.

After thoroughly reading these steps, you would have understood how to record a refund to a customer in QuickBooks Online via Credit Memo. On applying the steps, the refund will get successfully entered.

Wrapping up

In this informative post, we explained the situations under which a refund may be provided to a customer. Along with this, we showed how the refund can be recorded in QB once it has been given to the customer. Let us know how helpful this post has been. Also, to provide us with any suggestions, our comment section can be utilized.

For additional readings, see how to record a tax refund in QuickBooks. Also, take a look at the ways explaining how to record a cash withdrawal in QuickBooks.

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