How To Apply Credit Memo To Invoice In Quickbooks Online

How To Apply Credit Memo To Invoice In Quickbooks Online This QuickBooks tutorial will guide you through the process of creating a credit memo and applying it to an invoice. Below are quick instructions and a detailed walkthrough with screenshots:

Quick Instructions:

Create Credit Memo:

1. Click the +New button.
2. Under CUSTOMERS, select Credit memo.
3. Fill in the credit memo details.
4. Click Save and Close.

Apply Credit Memo:

1. Locate the invoice to which the credit memo will be applied.
2. Click the Receive Payment link.
3. Check off both the invoice and credit memo.
4. Click Save and Close.

Now, let’s explore the process step by step:

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What is a Credit Memo?

A credit memo in QuickBooks Online acts like a “credit” that can be applied to an open or future invoice. It’s similar to returning an item to a store and receiving in-store credit, where you don’t get cash back but can use the credit for future purchases.

In this example, we have a customer with an open invoice. We want to create a credit memo to “pay” the invoice while keeping a record of it.

Create a Credit Memo:

1. Click the +New button in the upper left corner.
2. Under CUSTOMERS, select Credit memo.
3. Fill in the credit memo details, which should be the reverse of the invoice details. For example, if the invoice increased accounts receivable/income, the credit memo will decrease both.
4. Click the Save and Close button.

You can use a different PRODUCT/SERVICE in your credit memo, but using the same one as the invoice is recommended for consistency.

Apply a Credit Memo:

Once the credit memo is created, you need to apply it to the invoice:

1. Find the invoice to which you want to apply the credit memo.
2. Click the Receive Payment link located to the right of the invoice.
3. The Receive Payment screen displays Outstanding Transactions (open invoices) and Credits. Check off both the invoice and the credit memo.
4. Click Save and Close.

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Now, on the Sales page, the invoice status will show as Paid, and the credit memo will be marked as Closed.

If you ever need to verify that an invoice was “paid” with a credit memo in the future, follow these steps:

• Open the invoice.
• Click on the little blue payment made link under Payment Status.
• A pop-up will appear, showing the payment. Click on the Date to access the Receive Payment screen, where you can see the credit memo used to “pay” the invoice.

You have successfully learned how to create a credit memo and apply it to an invoice in QuickBooks Online.