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A delayed credit in QuickBooks Online is a credit that you create for a customer but do not apply immediately. Unlike a regular credit memo that reduces the customer's balance right away, a delayed credit sits in the customer's account until you manually apply it to a future invoice. This gives you control over when and how credits are used against outstanding balances.
Delayed credits are commonly used when you want to issue a credit for returned goods, a pricing adjustment, or a promotional discount but do not want it to automatically reduce the customer's current balance. This is particularly useful for businesses that bill on a recurring basis and want to apply the credit to a specific future billing cycle rather than the next available invoice.
Go to + New > Delayed Credit. Select the customer, enter the credit amount and items, then save. When creating the customer's next invoice, QuickBooks shows available delayed credits in the sidebar — click Add to apply it.
Create a Delayed Credit
Step 1: Click + New in the left sidebar and select Delayed Credit under the Customers column.
Step 2: Select the customer from the dropdown, enter the date, and add the items or amounts that make up the credit. You can add descriptions to explain the reason for the credit.
Step 3: Click Save and close. The delayed credit is now stored in the customer's account but does not affect your financial reports yet.
Step 4: To apply the credit, create a new invoice for the same customer. QuickBooks will show available delayed credits in the right sidebar. Click Add to apply it to the invoice, reducing the amount due.
Delayed Credit vs Credit Memo
Step 1: A credit memo immediately reduces the customer's accounts receivable balance and appears on the Profit and Loss report as a reduction in revenue.
Step 2: A delayed credit has no financial impact until it is applied to an invoice. It exists as a pending item in the customer's account without affecting reports or balances.
Step 3: Use credit memos for immediate refunds or balance adjustments. Use delayed credits when you want to control the timing of when the credit impacts your books.
Step 4: Both types can be viewed under the customer's transaction list. Delayed credits show a status of 'Open' until applied.
Why Does This Problem Happen?
QuickBooks Online introduced delayed credits to give businesses more flexibility in managing customer credits. In traditional accounting, a credit memo immediately offsets revenue, which can distort monthly or quarterly financial reports if the credit relates to a future period's billing. Delayed credits solve this by deferring the financial impact until the credit is actually applied to an invoice, aligning the accounting entry with the business event.