# **How to Remove or Unapply a Credit from an Invoice or Bill in QuickBooks**

Removing a credit that has already been applied to an invoice (for customers) or a bill (for vendors) in QuickBooks is a common accounting task you may need to do when mistakes happen, customer circumstances change, or vendor credits were applied incorrectly. Understanding how to unapply these credits correctly helps maintain accurate financial records, clean accounts receivable and payable balances, and avoids reporting errors.

![Remove or Unapply a Credit from an Invoice or Bill in QuickBooks [phone]](https://hackmd.io/_uploads/HyiRAU0BWe.png)

In QuickBooks, credits may come in several forms:

* **Credit Memo (customer):** Issued to reduce the amount a customer owes.
* **Vendor Credit:** Issued by a vendor to reduce what you owe them.
* **Overpayment applied as a credit:** A payment that exceeded the amount due and was applied as a credit.

Below we break down how to remove or unapply credits when they’ve been applied to the wrong transaction or need to be reallocated.

## **Why You Might Need to Unapply a Credit**

There are several reasons to unapply a credit:

* The credit was applied to the wrong invoice or bill.
* You want to apply the credit to a different transaction.
* A credit was given in error and needs to be removed.
* For reporting or reconciliation purposes, the account balances must reflect the true state of receivables or payables.

## **Removing a Credit from an Invoice (QuickBooks Desktop)**

### **Step-by-Step Instructions**

If you applied a credit memo to an invoice by mistake, follow these steps to remove it:

1. **Open the credit memo** that was mistakenly applied.
2. Press **Ctrl + H** — this opens the **transaction history** window. This shows you all linked transactions.
3. **Double-click the invoice** where the credit was applied.
4. In the invoice screen, select the **Apply Credits** button.
5. In the *Previously Applied Credits* window, **clear the checkmark** next to the credit you want to remove/unapply.
6. Click **Done**.
7. Finally, **Save & Close** the invoice.

This action removes the credit from that invoice and makes it **available again** to apply elsewhere if needed.

## **Removing a Credit from a Vendor Bill (QuickBooks Desktop)**

Vendor credits may be applied to bills and can be removed or unapplied too. The method involves temporarily converting the credit into a bill:

1. **Locate the vendor credit** in your records.
2. Open it and select the **Bill** radio button (this turns the credit into a bill). Save & Close.
3. Now open the transaction you just converted into a bill again.
4. Change the radio button back to **Credit** and **Save & Close**. When prompted, accept the change.

This method effectively breaks the link between the bill and the credit so it’s unapplied and available for re-use.

## **Notes on QuickBooks Online**

QuickBooks Online (QBO) has a slightly different interface but the concept is the same — you unapply credits by editing the transaction:

* **Open the invoice in QBO** where a credit was applied.
* Look for a link that shows the applied **Credit Memo** or payment.
* Drill into that link to open the underlying **Receive Payment** or credit memo record.
* In QBO, you’ll usually see options like **remove**, **unapply**, or in some cases you may **void or delete** the payment/credit record to undo the application — this makes the credit memo unapplied again.

Sometimes QuickBooks Online auto-applies credits to the oldest invoice by default; if that’s not desired, you can turn off **Automatically Apply Credits** under *Settings → Account and Settings → Payments* before doing your adjustments.

## **Alternative Methods and Considerations**

### **1. Deleting or Voiding the Credit**

If the credit itself was an error (not just misapplied):

* You have the option to **delete or void the credit memo** entirely (especially in QBO). This removes it from all transactions.
* **Voiding** keeps an audit trail; **deleting** removes it completely.

### **2. Re-Creating and Re-Applying Credits**

If a credit is fundamentally correct but needs to be applied differently:

* Some suggest deleting the original credit memo and **re-creating it** so you can then apply it to the correct transaction.

### **3. When Credits Are Not Listed**

Rarely, the applied credit may not appear in the *Apply Credits* window (due to partial applications or data issues). In such cases, deeper investigation into related transactions or payments may be necessary, including checking related payments or reports.

## **Best Practices**

* **Always back up your file** before making adjustments to credits and payments, especially in QuickBooks Desktop.
* Document why you are removing a credit — maintaining comments or notes can help during audits.
* If credits span multiple invoices, unapply them carefully one at a time to avoid confusion.
* If you work with both customers and vendors regularly, maintain consistent naming conventions — this reduces errors.

## **Conclusion**

Removing or unapplying a credit in QuickBooks **888-463-3385**— whether from an invoice or a vendor bill — is a routine but essential part of bookkeeping and ensuring accurate accounts. The key steps involve opening the affected transaction, accessing the applied credits, unchecking the link, and saving the corrected transaction.

In QuickBooks Desktop, this process uses the **Apply Credits** window and history view to remove links. In QuickBooks Online, identifying the applied credit and editing or deleting the associated record is the typical path. Both methods restore the credit to an **unapplied state**, where it can be reallocated properly.

Getting comfortable with these processes will save time, reduce reconciliation errors, and keep your accounts clean and accurate.

## **Frequently Asked Questions (FAQ)**

### **1. Can I remove a credit that has already been applied in QuickBooks?**

Yes, QuickBooks allows you to remove or unapply credits that were previously applied to invoices or bills. You can do this by editing the invoice or bill and unchecking the applied credit from the “Apply Credits” or linked transaction section.

### **2. What happens after I unapply a credit in QuickBooks?**

Once a credit is unapplied, it remains available in QuickBooks and can be applied to another invoice or bill later. The original invoice or bill balance will increase accordingly.

### **3. How do I unapply a credit memo from an invoice in QuickBooks Desktop?**

Open the invoice, click **Apply Credits**, uncheck the credit memo from the list of previously applied credits, then click **Done** and save the invoice. This removes the credit from that invoice.

### **4. How do I remove a vendor credit from a bill in QuickBooks Desktop?**

To unapply a vendor credit, open the credit and temporarily change it to a bill, save it, then reopen it and change it back to a credit. This breaks the link between the bill and the credit.

### **5. Is the process different in QuickBooks Online?**

Yes. In QuickBooks Online, you typically remove credits by editing the invoice or payment where the credit was applied, then removing or unapplying the credit memo or linked payment record.

### **6. Why can’t I see the applied credit when editing an invoice?**

This may happen if the credit is tied to a payment or was partially applied. Check the related payment transaction or the customer/vendor transaction history to locate the applied credit.

### **7. Can I delete or void a credit instead of unapplied it?**

Yes. If the credit was created in error, you can delete or void it. Voiding keeps an audit trail, while deleting removes the transaction completely. Use this option carefully.

### **8. Will unapplied credits affect my financial reports?**

Yes. Unapplying a credit changes account balances, including Accounts Receivable or Accounts Payable, and may impact profit, aging, and reconciliation reports.

### **9. Should I back up QuickBooks before removing credits?**

Absolutely. It’s a best practice to back up your QuickBooks file before making changes to credits, payments, or invoices to avoid data loss or reporting issues.

### **10. Can I reapply the same credit to another invoice or bill?**

Yes. After unapplying a credit, it remains available and can be reapplied to the correct invoice or vendor bill at any time.