Issue a Customer Refund for an Open Invoice in Which a Payment has been Applied – QuickBooks Short Version

This is the short version. Click here for the long version.

Here is the scenario. Using QuickBooks, you billed your customer for services or goods. Your customer paid some of the amount due on the invoice. This invoice occurred in a prior period whether a previous month, quarter, or year. Now the customer wants to cancel the order and get their money back. The proper way to process a refund for this customer follows

  1. Go to Customers / Create Credit Memo/Refund
  2. Select Customer. Fill out Credit Memo to match original invoice exactly. Include all items/services and taxes charged. Credit Memo total should match Invoice total.
  3. Save and Close Memo. Select “Retain as an available credit” when prompted.
  4. Open Customer’s original Invoice. Apply credits. Save and Close Invoice.
  5. Open the Credit Memo previously created. Use credit to give refund. Click Ok.

Note: If you wish to charge a cancellation fee, create a new invoice to the customer for the fee BEFORE you create the Credit Memo. Save and close it. After you create the Credit Memo and have applied the credit to the original invoice, open the invoice for the cancellation fee and apply the credit to that. Then Open the Credit Memo to issue a refund of the remaining balance.

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