What’s the Difference Between Credit Memo, Delayed Credit and Customer Refund?
When keeping track of your business’s finances using Quickbooks, you’ll probably come across the terms “credit memo,” “delayed credit” and “customer refund.” Based on the name alone, you may assume that they all refer to the process of refunding a customer. If a customer overpaid or returned his or her purchased item, for example, you might use these options to refund the customer. Although they all have a similar purpose, however, they are each designed for a specific function. To learn more about the differences between credit memo, delayed credit and customer refund in Quickbooks, keep reading.
Credit Memo
In Quickbooks, a credit memo is a transaction that you can apply to a customer’s invoice as a payment. When a customer makes a payment, you can create a credit memo for the respective invoice showing that he or she paid it.
Delayed Credit
Delayed credit, on the other hand, is a transaction you create in Quickbooks that isn’t applied to the customer’s invoice until a future date. You can add it it the customer’s invoice as a line item, specifying the date on which you want the credit to be published. So, what’s the purpose of delayed credit? Delayed credit is used when a customer pays for a product or service before the actual due date. Many businesses simply publish the credit at the time the customer makes the payment, and this usually has no ill effect on their books. Some businesses, however, prefer to wait until a specific date to publish payments made by customers for the associated fiscal period. For these businesses, using a delayed credit is recommended.
Refund
Finally, a refund is exactly what it sounds like: a transaction in which money from a customer’s payment is refunded back to the customer. It’s not uncommon for customers to request a refund after buying a product or service. If a customer received the wrong size shirt from an apparel store, for example, he or she may request a refund. Refunds are also given to customers if the purchased product or service didn’t live up to the customer’s expectations. In Quickbooks Online, you can create a refund by logging in to your account and clicking the (+) button, followed by “Refund Receipt.” From here, you can select the product or service associated with the transaction as well as the amount that you want to refund the customer.
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