How to Refund a Customer in QuickBooks Desktop

Before you start

• Confirm the customer wants money back, not a credit to use on a later invoice.
• Decide what you're refunding. Intuit says you can refund the whole amount, part of it, or specific products and services.
• For a card payment taken through QuickBooks Payments, sign in to QuickBooks Payments from QuickBooks Desktop first.
• Card refunds through QuickBooks Payments must use the same merchant account as the sale. They go back to the same card, within 6 months, for no more than the amount charged.

If the customer would rather keep a credit, see how to create a credit memo and apply it to an invoice.

Step 1: Void instead, if the card payment hasn't settled

For a payment taken through QuickBooks Payments that hasn't settled, Intuit says voiding is usually better. A refund costs more in fees and takes days to reach the customer. If the payment has already settled, QuickBooks tells you when you try to void it.

1. 1Go to Customers > Customer Center and open the Transactions tab.
2. 2Select Sales Receipts or Received Payments, then find and open the transaction.
3. 3From the Edit menu, choose the void command, such as Void Sales Receipt.
4. 4Select Save & Close.

Voiding doesn't charge the card. The customer's bank may still hold the funds, and the customer may need to ask the bank to release them. For when to void and when to delete, see void vs delete transactions.

Step 2: Create the credit memo for the refund

1. 1Go to Customers > Create Credit Memos/Refunds.
2. 2Choose the customer in Customer:Job.
3. 3Enter the products or services you're refunding. You can refund the whole sale, part of the amount, or specific items.
4. 4Select Save & Close. The Available Credit window opens.
5. 5Choose Give a refund, then OK. The Issue a Refund window opens.

Step 3: Refund by check or cash

1. 1In Issue a Refund, set Issue this refund via to Check or Cash.
2. 2Choose the account the refund is paid from.
3. 3For a check, QuickBooks fills in the refund check for you. Select OK.

Step 4: Refund to the customer's card

This needs QuickBooks Payments, and you need to be signed in to it from QuickBooks Desktop.

1. 1In Issue a Refund, set Issue this refund via to the customer's card type.
2. 2Enter the card details, or select Swipe card and swipe it.
3. 3Check Process credit card refund.
4. 4Select OK.

QuickBooks settles card refunds with each day's batch at 3:00 PM PT. Intuit says the industry standard is 7 to 10 business days before the customer sees the money, depending on their bank.

Step 5: Link a refund check to an overpayment

If you're paying back money the customer overpaid, Intuit's article adds a step that ties the refund check to the overpayment.

1. 1Go to Customers > Receive Payments and choose the customer in Received From.
2. 2Select Discounts and Credits.
3. 3Under Available Credits, select the refund check you created, then Done.
4. 4If QuickBooks asks you to confirm the transfer, select Yes.
5. 5Select Save & Close.

Refunding a deposit or prepayment

• Enterprise Customer Prepayment not yet deposited: Intuit says you can delete the prepayment along with the sales transactions it's applied to.
• Enterprise Customer Prepayment already deposited: create a credit memo and apply it to another invoice, or write the customer a check.
• Upfront deposit recorded with a deposit item: create a credit memo with that item, choose Give a refund, and pick the bank account the deposit went into.

Both routes are covered in how to take a customer prepayment or deposit on a sales order.

How to void a refund

A card refund or credit memo that hasn't settled can be voided.

1. 1Go to Customers > Customer Center and open the customer.
2. 2Open the Credit Card Refund or Credit Memo.
3. 3Select View Refund receipt.
4. 4Select Void Refund, then OK.

Edge cases

• Card refunds through QuickBooks Payments go to the original card only, and only within 6 months of the sale.
• A small overpayment not worth refunding: Intuit's write-off method puts a charge-off item on an invoice for the amount, then applies the credit to it. Intuit says to check with your accountant first.
• A customer who paid less than the invoice isn't owed a refund. That's a short payment, which is handled in Receive Payments.

For underpayments and deductions, see how to handle short payments and deductions.

Where QuickBooks Desktop leaves the work to you

• Someone has to check each refund request against the original sale and decide between a refund, a credit or a replacement.
• Returned goods have to be checked before you decide what to refund.
• Whether you can void or have to refund depends on settlement, so timing matters.
• Refund checks still have to be printed and sent.