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J
Julians15
May 26, 2026
Question

Refund your customer for a paid invoice in QuickBooks Online

  • May 26, 2026
  • 1 reply
  • 2 views

Hi, I followed the instructions on the 'Refund your customer for a paid invoice in QuickBooks Online', but it doesn't seem to work for me. A customer overpaid an invoice, so I logged the payment and QB registered an overpayment and credit.

 

 

To resolve this, the instructions said to create a credit note, then create the refund expense, then link the refund to the credit note.

 

This last part doesn't seem to work for me because when trying to enter the Receive Payment transaction, on point no.5 it says to "select the checkbox for the expense you created", but the expense does not show in that section. It only shows unpaid invoices there. In the Credits section it shows two transactions: an Unapplied Payment (the invoice the customer overpaid) and the Credit Note I created for it. However it won't let me select these two without first selecting an invoice from the Transactions list. But I don't want to select an invoice because an invoice is not being paid.

 

I hope this makes sense? I also hope someone can help please? Thank you

1 reply

J
JeveeAdvin_laQuickBooks Team
QuickBooks Team
May 26, 2026

The reason your Expense transaction isn't showing up under Outstanding Transactions is likely because of its category. For an expense to appear on the Receive payment screen, edit the expense you created, and it must be assigned to Accounts Receivable.

 

Since QuickBooks already tracks the overpayment as an Unapplied Payment, you can delete the Credit note. Head to All Apps, select Sales & Get Paid, and choose Sales transactions. Find the Credit note you created and open it. Finally, at the bottom center, click More and select Delete.

 

Next, you'll need to edit the expense:

 

  1. Go to All apps and select Expense & Bills, and select Expense transactions.
  2. Locate the customer you wish to modify the expense for.
  3. Click View/Edit.
  4. In the Payment account dropdown, select the bank account where the overpayment was deposited.
  5. On the first line of the Category column, select Accounts Receivable.
  6. Enter the overpayment amount in the Amount field
  7. Select Save and close.

 

Finally, link the Refund to the Overpayment:

 

  1. Select +Create and choose Receive payment.
  2. Select the same customer.
  3. In the Outstanding Transactions section, check the box next to the Expense or Check you just created.
  4. Make sure the payment equals the open balance.
  5. Select Save and close.

 

Following these steps will successfully clear the overpayment from your customer's ledger and accurately reflect the money leaving your bank account. If you encounter any issues with these steps, please let me know!

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