Applying a Cleared Bank Transaction to a Vendor Credit

Hello there, @nilmot. Overpayments and refunds can be tricky, and we’ll ensure this is accurately recorded.

Before anything else, if you already applied the vendor credit to a bill, it's best to unapply it. This way, the vendor credit remains open and available to match the refund instead. We can proceed to record the refund as a Bank Deposit to Accounts Payable, then use Pay Bills to link that deposit to the Vendor Credit to finally match them.

Here’s how to create a bank deposit:

1. Hover to +Create and go to Bank deposit.
2. Choose the bank account to record the refund.
3. Enter the specific vendor under the RECEIVED FROM section.
4. Select Accounts Payable in the ACCOUNT column.
5. Enter the AMOUNT and PAYMENT METHOD of the refund.
6. Once done, click Save and close.
    

Afterwards, follow these steps to link the deposit to the vendor credit:

1. Hover to +Create.
2. Select Pay bills.
3. Choose the bank deposit you just created. You’ll see the amount of the vendor credit in the CREDIT APPLIED field.
4. Hit Save.
    

If the refund was issued to a credit card, refer to this article for detailed steps on how to record vendor refunds to a credit card: Enter vendor credits and refunds in QuickBooks Online.
 

Feel free to add a comment below if you have further questions.