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Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Chapter 25
Chapter 26
Chapter 27
Chapter 28

Chapter 8

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Credit Memos XE "Credit Memo"  and Refunds: XE "Refunds"  Reversing a sale is sometimes necessary.  The concern is, whether you want the customers future business? Can you make a difference in what he says to others who may be your prospective customers?  A yes answer means you give the refund promptly and cheerfully.  If you have to give up the money, at least make it buy good will.  A No answer is very unlikely.  People can regret business decisions that are driven by emotions. Regardless of your feelings about some impossible jerk that you never want to see again, others may believe his side of the story.  Some of these others could be people whom you want for customers.  However, if your assessment is totally negative, the money is part of your working capital, until such time as giving it back becomes better than keeping it.  Then you would need the following instructions.

Activities|Create Credit Memos/Refunds brings up a window quite similar to an invoice.

The Credit Memo (CM) records merchandise returned, or services whose billing must be reversed.  Data entry is essentially the same as on an invoice.  Positive numbers here have the same effect as negative numbers on an invoice.  Clicking the Tx History button will tell if the CM has been applied against an invoice. ( Tx means transaction.)

Sales tax credit may need to be included in the transaction, but is generated based on item, customer, and customers location.

Three cases apply here:  no refund, refund by check, or credit to credit card:

No refund is needed in two specific cases.  In the first, the credit memo was written to reverse an invoice, which the customer has not paid.  The register will show an unpaid invoice and the credit memo, with no connection between them.  To clear this situation, go to Receive Payments.   This is the transaction where the Amount is zero, and stays as zero.  Click on Apply Existing Credits.   If necessary, adjust amounts applied to specific invoices. 

In the other case, the credit memo may be held to apply to future invoices.  After the related invoice(s) has/have been written, Receive Payments must be used to close out the CM. 

Refund by check, or by credit card credit, may be generated from the Credit Memo:

1.  In the Memo field, enter something in the manner of Refund check 0000 has been written (or credit card credit.)  No link is established with the refund check, and there is nothing to warn you about writing a duplicate refund check.

2. Click the Refund button, which brings up a check.

3. Select the correct bank account.

4.  If the check number is known, clear the To be Printed box, and enter the number. 

5. Enter appropriate comments in the Memo field of the check face, (appears in the bank account register) and the Memo column of the detail section (appears in the Receivables register.)

6. Record the check.

We are not done yet.  Because the check is not linked to the CM, an Open Invoices report would show both as outstanding.

Linking the check to the CM is done with Receive Payments.

Amount always shows the money coming in the door on this transaction. In this case, it is zero.

Apply Existing Credits should be checked, to link the CM to the invoice. 

Refund Chk is displayed in the Invoice line, and must be checked.  This is actually logical.  A refund check has a parallel to an invoice, in that each records delivery of value to the customer.  The negative sale was recorded by the CM. 

OK button will record the payment.

If the check is printed from QuickBooks, the number can be edited into the Memo line on the CM.

Credit card credit can be done with a check, drawn on the bank account which is used to deposit payments received on that type of credit card. Clear the To be printed box, and enter something like Visa credit.  Remember that the memo on the check face will show in the bank account register, and the memo in the detail section will be seen in Receivables.  As with a cash refund, the CM and the check must be linked in Receive Payments.

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Last modified: May 21, 2004