You cannot import credit memos into QuickBooks Online with its built-in tools: the Import data screen has no credit memo type, and the invoice import refuses negative charges. Enter each credit memo through + New > Credit memo instead, or use a third-party import app. Each credit then reduces the customer's open invoice when you receive payment.
Can QuickBooks Online import credit memos at all?
Not through the built-in importer. Intuit's common questions about importing data into QuickBooks Online lists the types it accepts, including invoices, sales receipts, estimates and journal entries. Credit memos are not on that list.
The invoice import is no back door. Intuit's guide to importing multiple invoices into QuickBooks Online says you cannot add negative charges, such as discounts or credit memos. A row with a negative amount fails or has to be removed before the file goes through.
Why people go looking for a credit memo import
The need usually comes from one of three places: a migration with years of old credits, a batch of returns after a recall or a bad shipment, or a system that issues credits outside QuickBooks. Each points to a different answer, covered in the next section.
Entering a stack of credit memos without an importer
For a few dozen credits or fewer, typing them into the credit memo form is the dependable route. Choose + New > Credit memo, pick the customer, add the product or service being credited and the amount, and save. Third-party apps from the QuickBooks App Store can import credit memos from a spreadsheet, at the cost of another tool and its fee.
A few habits make manual entry faster:
- Sort the credits by customer, so one customer's credits are entered together.
- Use the same product or service the original sale used, so the credit reverses the right income account.
- Put the original invoice number in the message or memo field. It makes the credit easy to place later.
Migrations: credits or open balances?
During a move from another system, ask whether you need each historical credit or only what customers owe today. If an old credit was already used against an invoice, both are settled and neither needs to come across. Only unused credits matter, and those are often few enough to type in.
How does a credit memo apply against an open invoice?
A credit memo lowers what the customer owes. When you open Receive payment for that customer, QuickBooks Online lists open invoices and unused credits side by side. Tick the invoice and the credit, and the amount to collect drops by the credit. The customer pays the difference, and only that difference reaches the bank.
QuickBooks Online also has a setting that applies credits to the next invoice automatically, found under Account and settings. Check whether it is on before you enter a batch of credits, so you know whether they will be used up on their own.
A worked example
The figures are invented for illustration.
| Step | Document | Amount | Customer balance |
|---|---|---|---|
| 1 | Invoice 1043, 20 garden chairs | 600.00 | 600.00 |
| 2 | Credit memo CM-1043, 5 chairs returned | -150.00 | 450.00 |
| 3 | Payment received, invoice and credit ticked | 450.00 | 0.00 |
| 4 | Bank deposit | 450.00 |
The bank line in step 4 shows 450.00, not 600.00. If someone records the payment at 600.00 and leaves the credit unused, the deposit will not match the bank, and the customer shows a credit balance of 150.00 that nobody can explain.
Credit memo or refund receipt when cash goes back
Use a credit memo when the customer keeps the credit to spend later. Use a refund receipt when money actually leaves your bank account to go back to the customer. A refund receipt records the reduced income and the payment out in one form, so the withdrawal on the bank statement has something to match.
The two get mixed up when a credit memo is entered and the customer is then paid back by check. That leaves the credit sitting unused while a separate check is coded to an expense. If the credit memo already exists, a common fix is to write the check to the customer against Accounts Receivable, then link the check and the credit on the Receive payment screen so both clear. Ask your accountant before you use this on many customers.
If another company you manage keeps its books in Xero, the Xero side of the same work is covered in importing invoices into Xero and importing bills into Xero.
Negative invoice lines posing as credit memos
Putting a negative line in an invoice spreadsheet to stand in for a credit is a mistake. Intuit's invoice import refuses negative charges. A credit memo is a separate form for a reason: it shows as an available credit on the Receive payment screen, where it can be applied to the invoice it was meant to reduce.
Clean the spreadsheet before an invoice import. Pull every negative row into a separate list, import the positive invoices, and enter the credits as credit memos afterward. Then run the customer balance report and check that each customer's total matches the source system.
Refunds also appear on the bank side. If you are adding missing months from a bank file and the upload fails with an error, fixing QuickBooks error OL-222 covers one common cause. For months that only exist as PDF statements, SimpleBankConvert is being built to produce a CSV or QBO file for the QuickBooks Online bank upload; Get started saves you a place.