How to Record Vendor Refund in QuickBooks

To record a vendor refund in QuickBooks, you’ll need to create a bank deposit, select the vendor who issued the refund, and categorize it against the same expense account you originally used for the purchase. This ensures that your expenses are reduced properly, your bank balance stays accurate, and your reports reflect the true cost of running your business.

Open the Bank Deposit Window

1. From the left-hand menu, select + New.
2. Under Vendors, choose Bank Deposit.
3. Select the bank account where you actually received the refund.

This step sets up the transaction in the right place. For example, if your vendor refunded your business checking account, make sure you select that specific account in QuickBooks.

Add the Vendor as the Received From Party

In the Received From field:

• Select the vendor who issued the refund.
• If the vendor is not in your list, click + Add new to create them.

This makes sure the transaction ties back to the correct vendor, keeping your vendor reports clean.

Choose the Correct Payment Method and Date

• Enter the payment method (e.g., check, direct deposit, credit card refund).
• Select the date you received the refund.

For example, if you received a $200 refund via check on October 20, enter the payment method as “Check” and the refund date as “October 20.”

Categorize the Refund Properly

In the Account field:

• Select the same expense account originally used for the purchase.

For example:

• If you originally paid for “Office Supplies” and later received a $50 refund, choose “Office Supplies” again. This offsets the original expense.

This is a crucial step because it ensures your expense reports reflect the reduced cost.

Enter the Refund Amount and Save

• Input the exact refund amount.
• Add a memo for clarity, such as “Vendor refund for returned printer ink.”
• Review all details and click Save and Close or Save and New if you need to add more deposits.

Now your vendor refund is correctly recorded and linked to the right expense category.

Verify the Refund in Reports

After saving, go to Reports > Profit and Loss to confirm the refund was applied to the right expense account. The refund should reduce your total expenses.

You can also check the Vendor Transactions Report to ensure the refund is linked to the right vendor.

Example: Vendor Refund Scenario

In this example, QuickBooks will now show $150 in net Office Supplies expense for the month.

Bonus Tip: Automate Your Payments and Refund Tracking with DepositFix

If you handle frequent payments and refunds through your online forms, DepositFix integrates with QuickBooks to automatically sync all customer and payment data. This eliminates manual entry, keeps refunds organized, and ensures your QuickBooks records are always up to date.