Process a Refund in QuickBooks Online

There are a two general paths to handling refund in QuickBooks online when using the IIF import method.

1. Creating a refund check either because of void, overpayment, or credit memo.

2. Creating a refund via credit card, or third-party finance that will reduce a daily deposit.

3. The final step in either path is to link the transactions shown at the end of this document.

Refunds via Check

Creating a check refund in QuickBooks when using the IIF import method is a two-step process detailed below.  This assumes the payments are in QuickBooks from a previous sync.  If the invoice has been voided before payments are pushed you would manually enter the payment first this would be rare.    

The first step is to create the check refund.  

1. Click “Create”

2. Select “Check”

You will write the check as shown below.

1. Select the customer as the Payee in the drop down. Confirm the bank account you are writing the check from. Adjust the check date if needed.

2. Confirm the address is correct and where you want to send the check.

3. Select Accounts Receivable as the “Category”

4. Enter the amount of the refund.

5. Select the customer in the drop down

6. Save and Close

Refunds via Credit Card or Third-Party Finance

You will start the refund during the make deposit process.  The first steps of making a deposit will be the same as usual.    

1. Select the bank account

2. Enter the date of the deposit.

3. Select the payments you are making the deposit for.

4. Select the customer in the “Received From” that you are creating the refund for.

5. Select “Accounts Receivable” in the account.

6. Enter the amount as a negative. This will adjust the deposit amount less the refund to match your daily payment report from Wizard.  I show an extreme example in the screenshot below that the refund is actually more than the days transactions and makes the deposit negative.  QuickBooks online will allow this.  

7. Save and Close to complete this step.  

Linking the check and the refund is the final step  

This is a little unconventional, but it is required in QBO to connect the two.

1. Click “Create”

2. Select “Receive Payment”

Linking the transactions

1. You will search for the customer in the drop down.  

2. Once the customer is selected the outstand transactions and the refund check should appear checked like they do in the screenshot below.  If you have a customer that has a complex history, you will need to confirm that the entries selected work.

3. Click “Record and Close” as the final step.