BY AUTUMN ELLIOTT — CLIENT ACCOUNTING SERVICES MANAGER, CERTIFIED QUICKBOOKS PRO ADVISOR
A credit memo is a posting transaction that can be applied to a customer’s invoice as a payment or reduction. A delayed credit is a non-posting transaction that you can include later on a customer’s invoice.
A refund is a posting transaction that is used when reimbursing a customer’s money.
This means that:
Credit memos are used to offset an existing customer balance.
Delayed Credits can be included only on an invoice. Delayed Credits don’t affect a customer balance until they are included on a saved invoice.
Refunds are used to show money given back to a customer to refund for services the customer is not happy with, to offset a credit balance, merchandise or service not received, or an overpayment.
Creating a Credit Memo and applying it to an Invoice:
- Go to the Plus Sign (+) and select Credit Memo. (If you don’t see this, click show more.)
- Fill out all required fields.
- Click Save and new or Save and close.
Applying the Credit Memo to an invoice:
Go to the Plus Sign (+) and click Receive Payment.
Complete these fields as follows:
- Customer: From the drop-down list select the customer the credit memo is for.
- Date: Change if necessary
- Amount:, Pymt Method: and Ref#: fields are to be left blank.
- Memo: (Optional)
- Deposit To: Leave blank since money is not actually being deposited with this transaction.
- Select the Invoice that you want to apply the Credit Memo against.
- Select the Credit Memo that you are wanting to apply to the invoice.
- Verify that the total to pay (if any) is correct after applying the Credit Memo then click Save.
If you create a credit memo and want to issue a refund instead or vice versa you will need to delete the transaction and recreate it.
- Locate the credit memo or refund.
- In the navigation bar, click Customers/Invoicing/Sales (depending on your setup).
- Click on the customer’s name.
- Under Transactions, set Show to All transactions.
- Double-click on the credit memo or refund.
- On the bottom under More click on the Delete button.
- Once the credit memo or refund is deleted you will want to enter in the intended refund or credit memo.
Contact MBE CPAs if you have any questions.