QuickBooks Online Tips — Vendor Refunds/Return of Payment

Learn how to record a refund/return from a vendor in QuickBooks Online.

Step 1: Enter a vendor credit if the expense needs reduced.

This makes sure the credit hits the expense account you use for this vendor.

1. Select + New.

2. Select Vendor credit or Receive vendor credit.

3. In the Vendor dropdown, select your vendor.

4. Depending on how you record the expense with this vendor, enter the Category details or Item details to offset the original entry.

5. Select Save and close.

Step 2: Deposit the refund.

6. Select + New.

7. Select Bank Deposit.

8. In the Account drop-down menu, select the bank account where refund received.

9. In the Add funds to this deposit section, fill out the following fields.

a. Received from: Select the vendor who gave you a refund.

b. Account: Select Accounts Payable. Important: You need to pick Accounts Payable so you can tie the refund to the vendor credit. This may seem a little strange, but it’s the best way to do this.

c. Payment method: Enter the method your vendor used to refund you.

d. Amount: Enter the amount of your refund.

e. Select Save and close.

Step 3: Use Pay Bills to link the deposit to the vendor credit

This last step is to keep your vendor expenses accurate.

10. Select + New.

11. Select Pay Bills.

12. Select the bank deposit you just created. You will see the amount of the vendor credit in the Credit Applied field. The Total payment should be $0.00.

13. Select Save and close.

Notes: If the refund was due to an error and the funds are still due the vendor, skip Step 1 and proceed to Step 2. Once the payment is reprocessed, complete Step 3 linking the deposit to bill payment to record the funds being resent.

If you received a credit on a future purchase, you should enter a credit only.