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How to Create Credit Memos from Invoices in QuickBooks Online
Issuing credit memos in QuickBooks Online just got easier—and faster. With the latest update, you can now create credit memos directly from invoices. This eliminates the need to re-enter information and helps keep your customer records clean and accurate. Whether you’re adjusting for a returned product, a billing error, or a service discount, this new workflow makes issuing credits seamless.
What Is a Credit Memo and When Should You Use It?
A credit memo is a document that reduces the amount a customer owes on an invoice. Common scenarios include:
- A customer returns a product
- You want to offer a post-sale discount
- You made a billing error
Creating accurate credit memos is essential for maintaining trustworthy records, accurate customer balances, and clean audit trails.
New Workflow: Credit Memos from Invoices
With this update, you can skip the old, manual process of creating a credit memo from scratch. Instead:
- Open the original invoice
- Click the More button at the bottom
- Select Create credit memo
- QuickBooks auto-fills the customer and all relevant details
- Modify the line items as needed and save
This process ensures consistency and saves time, especially for businesses that handle frequent returns or discounts.
Pros and Cons
Pros:
- Reduces manual data entry
- Ensures consistency with original invoices
- Keeps customer records organized
Cons:
- Currently only available from invoices (not estimates or sales receipts)
- May require additional edits for partial returns or unique adjustments
Best Practices
- Always review the credit memo before saving to ensure it reflects the correct items and amounts
- Run customer balance detail reports regularly to monitor credit activity
- Communicate with your customer promptly once a credit memo has been issued
Conclusion
The ability to create credit memos directly from invoices is a small change that offers big time savings. By simplifying your workflow and reducing opportunities for error, this new feature can help you provide better customer service and maintain cleaner books. If you’re still creating credit memos manually, it’s time to update your process.
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