2026 Guide: Unapplying Credit Memos In QuickBooks Without Errors

Managing credits, invoices, and payments in QuickBooks can be smooth—until an entry gets applied incorrectly. Many users face a common challenge: how to unapply a credit memo in QuickBooks when it has been accidentally linked to the wrong invoice or customer balance.

Learn how to unapply a credit memo in QuickBooks with simple steps. Fix payment errors fast. For expert assistance, call +1-866-409-5111.

The good news? Whether you are using QuickBooks Desktop or QuickBooks Online, the process is simple once you know the right steps. In this guide, we’ll walk you through the process, explain why it happens, and show you how to avoid similar issues in the future.

If you need personalized guidance or bookkeeping help, you can reach a trained accounting professional at +1-866-409-5111.

What Is a Credit Memo in QuickBooks?
A credit memo is an accounting tool used to reduce the amount owed by a customer. It is typically issued when:

A product is returned

An invoice was overcharged

A discount or adjustment is needed

A billing error occurred

However, when a credit memo is applied to the wrong invoice, you must unapply it to fix the customer’s balance.

How to Unapply a Credit Memo in QuickBooks Online
Follow these steps:

Step 1: Open the Customer Profile
Go to Sales

Click Customers

Choose the customer whose memo you want to update

Step 2: Find the Credit Memo
Click on the Transactions tab

Locate the Credit Memo that was applied incorrectly

Step 3: Unlink the Credit from the Invoice
Open the Invoice the memo is applied to

At the top, click Payment link / Credits applied

Remove or uncheck the Credit Memo

Save and close

Once you do this, the credit memo is now available to be applied correctly.

How to Unapply a Credit Memo in QuickBooks Desktop
If you’re using QuickBooks Desktop, follow these steps:

Step 1: Access the Payment
Go to Customers

Select Receive Payments

Locate the customer and open the payment associated with the credit memo

Step 2: Remove the Credit Application
In the payment window, uncheck the box next to the Credit Memo

Step 3: Save the Changes
Click Save & Close

The credit memo is now unapplied and available to use on the correct invoice

Why You Might Need to Unapply a Credit Memo
Here are the most common reasons:

Credit was applied to the wrong invoice

Customer returned only part of an order

You need to reissue the credit

The customer account balance is incorrect

A billing error needs correction

If you need help correcting customer balances or reconciling transactions, experts are available at +1-866-409-5111.

Pro Tips to Avoid Credit Memo Mistakes
To maintain clean financial records, follow these best practices:

✔ Always verify invoice numbers before applying credits
✔ Send statements to customers regularly
✔ Use QuickBooks’ audit log to review previous adjustments
✔ Reconcile customer balances monthly
✔ Keep credit memos clearly labeled
Doing this not only prevents errors but also keeps your bookkeeping accurate and tax-ready.

Final Thoughts
Being able to unapply a credit memo in QuickBooks is a valuable skill for any business owner or accountant. Whether you're correcting a simple mistake or reorganizing customer balances, the steps are straightforward once you know where to look.

If you get stuck or prefer expert help with credits, invoices, or account cleanup, you can speak with a bookkeeping specialist at +1-866-409-5111 for assistance.

FAQs
1. Can I delete a credit memo instead of unapplying it?
Yes, but only if it’s not needed. If the credit is still valid, unapply it instead of deleting it.

2. Will unapplying a credit memo affect my reports?
Yes. Any change to customer balances may impact AR, sales, or revenue reports.

3. Can I reapply a credit memo after unapplying it?
Absolutely. Once removed, you can apply it to any correct invoice.

4. Why can’t I unapply the memo in QuickBooks Online?
This can happen if the invoice is partially paid or locked by closing date. Remove restrictions first.

5. Do unapplied credits affect customer statements?
Yes, they will appear as a separate credit balance on the customer’s account.