How to Handle a Refund from a Vendor In Quickbooks

There’s an old saying that you have to spend money to make money. Well, this holds true in today’s world. If you own or otherwise operate a small business, you probably have vendors from whom you purchase products and services. Retail stores, for instance, purchase their inventory from vendors; restaurants also buy their food and ingredients from vendors. But what happens if a vendor offers you a refund?

There are times when a vendor may offer a refund. If you accidentally overpaid, for instance, the vendor may issue a refund for the difference. Regardless of why the vendor offered a refund, it’s important to record this transaction in your Quickbooks accounting software. Thankfully, it’s a quick and easy process that should only take a few minutes to complete.

To enter a refund from a vendor, log in to your Quickbooks account and choose Banking > Make Deposit. Under the “Received From” menu, select the vendor who is issuing the refund. Assuming you’ve done business with this vendor before, he or she will be listed here. If you haven’t done business with the vendor, however, you’ll need to set up a new account for them.

After selecting the vendor under the “Received From” menu, go to the “From Accounts” section and choose “Accounts Payable.” Here, you can enter the amount of the refund in the “Amount” field. If the vendor is issuing a refund for $300, for instance, enter $300 in this field. Double-check to make sure the amount listed reflects the actual refund amount issued by the vendor. When you are finished, click “Save & Close” to complete the changes.

Keep in mind, however, that this only works for Quickbooks Desktop (or Hosted Quickbooks). If you use the cloud-based version of Quickbooks, you’ll need to handle vendor refunds in a different way. This involves logging in to your Quickbooks Online account, creating a credit in the vendor’s profile, post deposit, choose the vendor and use Accounts Payable as account. Next, click the “+” button, followed by “Check” under vendor. From here, you can add credit previously entered.

Not every small business owner will enter circumstances requiring them to handle vendor refunds. If you always pay the correct amount to vendors, they shouldn’t issue a refund. Nonetheless, it’s a good idea to familiarize yourself with the process of recording such refunds just in case. Because when it happens, you’ll need to record the refund to keep your books in order.

Did this tutorial work for you? Let us know in the comments section below!

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