Procedure to Set up QuickBooks Credit Memo for Customers

If starting a new business, then the QuickBooks application is just the perfect application to manage your financial operations and actions. You can also use QuickBooks credit memo for your business to manage the inventory and customer history for the products. This helps you manage returns, refunds, or any invoice adjustments for the customers. You have options like creating a credit memo, modifying the details, and updating the current balance or credits for them. In this blog, we will learn about the procedure to help you set up the memo.

If you need any help with your inventory management in QuickBooks, feel free to get in touch with our ProAdvisor Solutions experts.

What are QuickBooks Credit Memos?

A credit memo or credit memorandum can be added to a customer’s account as a credit applicable to an active invoice. This is an in-store credit rather than getting cash back; the credit can be used for future purchases. Creating a credit memo is an easy and seamless process that helps the tool reduce the amount a customer owes, either immediately or in the near future. For financial business managers, the credit memo plays an important and crucial role. It is used to correct errors, provide discounts, and maintain the accounts.

What are the Types of Credit Memos in QuickBooks?

In QuickBooks Desktop, there are different types of credit memos, which are as follows:

1. Standard Credit Memos: This type of memo is used most commonly by the users of QuickBooks. This type can hold record refunds and adjustments that are applied to customers’ accounts. These can be either printed or emailed for the credit memos to the customers. 
2. Recurring Credit Memos: This type of memo is used to apply a discount or a refund to a customer’s account regularly. This type of credit memo is usually good for businesses that have a recurring customer base, such as a subscription-level-based application.
3. Discount Credit Memos: This type of memo is used by businesses for discount credit memos. One can apply a discount to a customer account. Businesses can easily use this type of credit memo to offer valuable discounts for their customers. They offer these discounts when the item is returned for a new purchase.
4. Void Credit Memos: A void memo is a type used only to cancel an already misused credit memo. This can occur when a refund or a credit is no longer needed. This can also happen when the customer has received the credit or refund.

Let’s move on to the next section to understand why you should prefer to use the credit memo.

Why Use the Credit Memo in QuickBooks Desktop?

There can be several factors that are useful for the users when you use a credit memo, which are mentioned below:

1. Credit memos are used to cancel either a particular segment or the entire order placed. It is crucial as it helps to maintain the accuracy of records, as invoices cannot be modified or eliminated once delivered to the customers.
2. There are businesses offering credits instead of refunds for the goods or supplies. These credits can be later redeemed for other products or services provided by the business.
3. The credit memos can be used by businesses as rewards for their users.
4. The customer paid more than the bill was originally made out for.
5. There is a return of the product.
6. A refund has been requested.
7. The users get assured store credits.
8. The credit memo can be applied to particular customers with respect to active invoices.

You might be wondering: How can you create a QuickBooks credit memo? Let’s learn how to do it.

Steps to Make Credit Memos in QuickBooks Online

In this section, we will go through how you can apply and create the memo in QBO.

Create Credit Memo

1. Click on the Plus (+) icon.
2. Tap on the Credit Memo option.
3. Choose the customer’s name to whom you wish to create the memo.
4. Now, input the date.
5. Enter the essential information.
6. Choose Save and Close to successfully make the memo.

Apply Credit Memo

1. Choose the Sales option from the left side.
2. Click on the customer’s name for whom you are willing to apply the credit memo.
3. Look for the invoices and tap on the Receive Payment.
4. Input all the essential information if required.
5. Check if you have chosen the correct invoices in the Outstanding Transaction section.
6. Choose Save and close option to save the progress.

Apply Credit Memo to Invoice

1. Locate the credit memo you wish to apply by heading to the Sales menu.
2. Choose the Credit Memos option.
3. Now, select the invoice you wish to apply the credit memo to from the Apply To menu.
4. Enter the specific amount.
5. Review the details to ensure they are correct.
6. Then hit Save and Close to apply the memo.

Create a Statement

1. Head to the Sales option.
2. Tap on the Customers and tap on the name.
3. Click on the New Transaction button.
4. Select the Statement.
5. Set the Statement Type to the Balance Forward.
6. Choose the Start Date and End Date.
7. Choose the name of the customer.
8. Tap on Print or Preview to verify the details.
9. Lastly, tap on Save and send.

These are the steps for the key actions you need in the QuickBooks credit memo for the Online version.

Conclusion 

We have discussed the detailed steps for creating or modifying a credit memo in your QuickBooks application. Further, we have also included the advantages of a memo and why you should prefer to use it for your business. If you need any help with managing your business in QuickBooks, feel free to get in touch with our ProAdvisor Solutions experts.

Frequently Asked Questions (FAQs)

Erica watson

Erica Watson is writing about accounting and bookkeeping for over 7+ years, making even the difficult technical topics easy to understand. She is skilled at creating content about popular accounting and tax softwares such as QuickBooks, Sage, Xero, Quicken, etc. Erica’s knowledge of such softwares allows her to create articles and guides that are both informative and easy to follow. Her writing builds trust with readers, thanks to her ability to explain things clearly while showing a real understanding of the industry.