How to Create a Credit Memo in QuickBooks for Outstanding Payments

Are you struggling with outstanding payments from your customers? In this scenario, creating a credit memo can be an effective way to manage these unsettled debts. A credit memo is a type of transaction in QuickBooks that allows you to issue credits to your customers for returned goods or services.

Let's take the example of company ABC, which sold goods worth $1,000 on credit but has yet to receive payment from the customer. In this case, ABC can create a journal entry for a credit memo. This will help refresh website preferences that might be causing issues when using QuickBooks Online (QBO).

To create a credit memo in QBO, follow these steps:

1. Go to the Vendors menu and select Enter Bills.

2. Select the vendor you need to issue the credit memo for from the drop-down menu.

3. In the Enter Bills window, fill out the necessary details, including the date, amount, and description of the credit memo.

One common scenario where a credit memo is issued is when goods are returned due to damage or other issues. For instance, on June 7, ABC issued a $1,000 credit memo to one of its customers for goods that were returned due to damage.

However, sometimes credit memos may not automatically link to the correct invoice in QBO. This can be fixed by clearing your cache and cookies or by using incognito mode. For example, if you're using Google Chrome or Microsoft Edge, you can activate incognito mode by pressing Ctrl + Shift + N.

Occasionally, QBO can be poorly configured, resulting in unexpected behavior due to overloaded site data. In this case, disabling the Automatic Apply Credit feature and opening a different browser or private window can help isolate the issue.

If you're experiencing issues with credit memos not linking to the correct invoice, I recommend following these steps:

1. Record payment to the correct invoice once the transaction is deleted.

2. Delete the payment linking the Credit Memo and the Invoice.

By disabling the Automatic Apply Credit feature and following these steps, you can ensure that your credit memos are accurately linked to the correct invoices in QBO.

Quickbooks vendor credit memo