How to Handle Credits and Refunds

In order to keep good track of sales returns transferring from FW into QB, the correct steps need to be followed taking into consideration what happened to the original invoice. You must remember that only payments transfer to QB until the time that the invoice is consider complete. At that point, the total amount of the invoice will be transferred and accounted for in QB.

The following are scenarios that are more likely to occur. Instructions on how to handle each scenario is explained below, the assumption is made that Import/export routine has been performed for the day:

A. Invoice written and payment received. Customer comes back and cancels order; refund of payment must be given. This a Pending Order. Since this is a pending order, only the payment has been sent to QuickBooks:

Furniture Wizard: Post a negative payment to the invoice to zero out payment amount, and void the invoice if there will be no further transactions.

QuickBooks: In QB the customer has a credit (negative) balance. Go to Banking, Write Checks-create a check for the refund amount, under account, distribute to Accounts Receivable and under Customer: Job use customer name. This process will zero out the balance in the customer’s account and deduct the money from your checking account.

B. Invoice written and payment in full received. Customer comes back and changes items on invoice. This a Pending Order. Since this is a pending order, only the payment has been sent to QuickBooks:

Furniture Wizard: Modify the invoice to reflect needed changes. If payment due is more than what has already been paid, post a payment for the difference. If payment received is more than total amount of invoice, post a negative payment for the difference to zero out the amount due.

QuickBooks: In QB the customer has a credit (negative) balance for original payment amount, if paying additional amount, the second payment will go into QB along with the invoice to balance the invoice to zero. If there is an overpayment then Go to Banking, Write Checks-create a check for the refund amount, under account, distribute to Accounts Receivable and under Customer: Job use customer name. This process will zero out the balance in the customer’s account and deduct the money from your checking account (same as above).

C. Invoice written and delivered. Payment in full was received. Customer cancels order after delivery of furniture and full refund must be given. This a Completed Order. Since this is a Completed order, both the invoice and payments have been sent to QuickBooks.

Furniture Wizard: Create a Credit Memo (negative invoice). Post a negative payment to zero out credit memo. This CM will transfer into QB, but not the negative payment.

QuickBooks: The CM will be applied to the original invoice leaving a credit balance on the customer record, create a refund check for the amount of the payment as explained above.

D. Invoice written and delivered. Payment in full was received. Customer cancels order after delivery of furniture and refund will not be given. Payment will be retained for future purchase. This a Completed Order. Since this is a Completed order, both the invoice and payments have been sent to QuickBooks.

Furniture Wizard: Create a Credit Memo (negative invoice). Do not post a negative payment until customer returns to make a new purchase. Process the invoice to return items into inventory. This CM will transfer into QB when customer returns to make new purchase at which time a new invoice needs to be created with the new items on the invoice. Apply a Store Credit type of payment to this new invoice and a negative Store Credit type of payment to the Credit Memo.

QuickBooks: The Credit type of payment applied on the new invoice from the store credit is transferred into QB as a regular payment, but since that payment is already in QB, it must be deleted from QB as it is a duplicate payment (the one being applied from the original invoice). By deleting this extra payment, the customer balance will zero out.

E. Invoice is written and delivered. Payment in full was received. An adjustment needs to be made to the sale price of the item(s) for whatever reason. This is a Completed Order.

Furniture Wizard: Create a Credit Memo (negative invoice) for amount of adjustment. Post a Refund type of payment to the credit memo to zero out balance.

QuickBooks: The CM will be applied to the original invoice leaving a credit balance on the customer record, create a refund check for the amount of the credit as explained in scenario A.