How to apply a credit memo to an invoice in Quickbooks
Every business needs managers but most importantly, they need organizers and QuickBooks is one such software that organizes and simplifies taxes, payments, and even refunds. But sometimes as functional as it gets, it does have its pitfalls as a software. Unexpected Quickbooks error messages are pretty common ones but that’s not the end.
Some distinct features like applying a credit memo to an invoice in QuickBooks acts like a helping hand for you. Whenever your customers are in any kind of trouble, Quickbooks is always there for you.
Without any doubt, in this article, we are going to discuss the credit memo feature in Quickbooks.
What is a credit memo?
It is a document issued by the seller also known as a “credit memorandum” in which the amount is reduced to what the buyer owes to the seller under certain terms and conditions.
This document includes precisely all the information, why the amount stated on the memo has been issued, and other details.
In simple words, If the customer paid more than he owed and wants to refund an item for which he has already paid then now you have to credit him or her for its cost.
Why is a credit memo issued?
Since you are familiar with what a credit memo is, it’s essential to know why it is issued in the first place.
The main reason to have an item listed in the credit memo is to account for any inventory items accurately. Safe-keeping business records — when the invoice was paid, when the items were sold are crucial, so while issuing a credit memo these same items can be selected and added to the quantity for those inventory items.
This can be complicated sometimes because it requires bookkeeping, tracking more records and sales, payment. This is where QuickBooks comes in and makes it easy for you.
How to apply to a credit memo to an invoice in Quickbooks
After being familiar with the benefits of a credit memo, you are ready to deep dive into how to apply a credit memo to an invoice.
It’s pretty simple, follow the given steps below:
- On QuickBooks homepage, click on refunds and credits OR
- Click the (+) icon and select credit memo.
- Now choose the merchant name and enter the memo date.
- Enter the service/date, product, and amount fields.
- Also fill in the other fields, if required like (description or Qty).
- Click on Save and close.
Following the steps mentioned above you can create a credit memo, let’s take a look at how you can apply it to the invoice:
- Head over to sales in the left navigation bar.
- Go to the Customers tab.
- Now click on the customer’s name.
- Find the invoice you want to apply to an invoice and choose to receive payment.
- In the window, fill in all the necessary details from payment dates to reference no.
- Under the outstanding Transactions section, select the correct invoice.
- Enter the correct credit memo in the credit section.
- Hit Save and then close the window.
Now you’re good to go.
How to refund once the credit memo is created?
There are few ways to pay back your customer’s money but in this section, you will learn about giving a refund option.
Here’s how you can issue a refund to your customer:
- Open the QuickBooks window and choose to Give a refund
- This will open the Issue a refund window.
- Fill in all the information except the payment method.
- Under the issue, this refund via a drop-down list, select cash and choose the correct account from the list. ( an amount will be subtracted from the account)
- Click on the check and the account, then tick the box in front of to be printed.
- This refunded amount will remain in the same list, click on print forms/checks.
- Lastly, choose a credit card and tick the box in front of Process credit card refund when saving and issue a credit card refund easily.
Now you can follow these steps and put a checkmark on all your invoices, refunds while focussing more on your business.
To conclude, Quickbooks is an easy-to-use software with a variety of features, and creating memos is one of them. This not only helps you to be at peace with your payments, inventory counts, refunds but also helps you to get organized.
This article is written to brief you all about creating memos and applying to invoices in QuickBooks. Hope this is informative and a good read.