A QuickBooks credit memo is basically used to apply for the invoice of the customer as a payment or reduction. So it is just what it sounds which is used to offset an existing customer payment. When your customer returns any product for which they’ve already paid, you will have to credit him/her the cost of the product. Of course, it requires more c accounting process as you will have to track the sale, its payment, and the returned products. But not to worry here in this blog we will show you how to create and apply credit memos in QuickBooks Online. Before that look at these points that will clear your concept of QuickBooks credit memo:

  • Customers are able to use their credit memo as a payment to an invoice. They are free to utilize either all of their credit memo or a single portion of it.
  • Users are able to apply for a credit memo while recording payment for their customer’s invoices.
  • Credit memos affect reports of sales, even though you do not apply them on invoices.

Create and apply a credit memo

You will get to know how to create and apply a QuickBooks credit memo to customers in QuickBooks Online. Here, we have divided the steps into two different sections including how you can create and how you can apply them to your customer transactions. So let us begin the process:

Here is, how to Create a credit memo?

  • Go to the plus sign button + New.
  • Now click on the option of a Credit memo or Give credit.
  • Type the name of your customer.
  • Then fill out the required information fields:
    • Date
    • Products/service items
    • Quantity
    • Amount
  • Click on the Save and Close button to save your changes.

Apply the credit memo to an invoice

Here you get two different options to apply the credit memo to an invoice. Ether you can select the manual method or automatic method for applying QuickBooks credit memo to open invoices. Now begin the process like this:

Manually apply the credit memo to an invoice

Here’s how you can manually apply the credit memo to an invoice:

  • Go to the plus sign button + New.
  • Choose the option to Receive payment or Receive invoice payment.
  • Type the name of your customer and then fill out the required information  fields:
    Reminder: always select the same customer or project you have been selected in the invoice.
    • Date
    • Memo (this is optional)
  • Here leave the fields blank of Payment method, Reference no, Deposit to, and Amount received.
  • Now from the Credits section, chose the credit memo from Step 1. After that, from the Payments column, type how much credit your customer wants to utilize.
  • Also, ensure that the total to pay is correct after applying the credit memo to an invoice.
  • Then hit on the Save and Close button.

Automatically apply the credit memo to an invoice

Here’s how you can automatically apply the credit memos to an invoice. 

  1. Select the Settings option, then hit on the Account and Settings option.
  2. Choose the Advanced tab, then hit on the Edit option in the Automation section.
  3. From here choose the option to Automatically apply for credits.
  4. Now click on the Save button, then hit Done.

QuickBooks users need credit memos when their customer gets a refund for a product or item service. The credits will show in the Accounts Receivable register and within the Customer Center. Users can also delete or un apply the credit memo to remove the credit available to the customer. Here is how you can perform this activity:

  • Go to the Customers section and choose the option of Customer Center from the drop-down menu.
  • Now hit on the Customers & Jobs tab.
  • Then from the customer list select the customer with the available credit.
  • Click on the credit memo you have to delete.
  • Then hit on the Edit option. From the drop-down menu, hit on the Void Credit Memo or Delete Credit Memo option according to your preference. 
  • Now you will get a confirmation window, hit on the Confirm button.

Winding up !!!

It is important that QuickBooks Online users understand the ways to create and apply QuickBooks credit memo. This process to Credit Memos and apply to an invoice takes a little time that could be used for better purposes. If you found this article something helpful or different then you must find our QuickBooks blogs. Just head over to our website for a number of useful content like this. 

QuickBooks Credit Memo
Call Now

    Contact our Experts

    Get your accounting work done by experienced accountants. Fix all your accounting software errors & problems.