QuickBooks Desktop (Premier & Enterprise) requires routine maintenance to keep your company file running smoothly. Over time, databases can become corrupted due to hardware issues, software conflicts, or operational practices. As a relational database, QuickBooks naturally experiences degradation, a process known as entropy.
A best practice to maintain your data integrity is to regularly create a backup within QuickBooks. This is different from an image backup performed by your IT team. QuickBooks' internal backup process verifies data integrity and can fix minor errors through a rebuild. When you create a backup (File > Back Up Company > Create a Local or Online Backup), QuickBooks scans for data issues and prompts you to rebuild the file if errors are found. However, not all errors can be automatically fixed by QuickBooks, including Transfer of Credit Errors.
This guide will walk you through resolving Transfer of Credit Errors before running a data rebuild.
Understanding Transfer of Credit Errors
A Transfer of Credit Error typically occurs when an attempt is made to apply a credit from one customer, vendor, or account to another in an unsupported manner. This often involves incorrect use of General Journal Entries (GJEs) rather than the appropriate transaction types (Credit Memo for customers or Vendor Credit for suppliers).
While QuickBooks allows users to create GJEs to credit Accounts Receivable (A/R) and debit another account (such as Suspense), this method is not the best practice. Even though the transaction may appear to work on the surface, it creates inconsistencies within the QuickBooks database, leading to a Verify Failure error during a data check.
“Verify Error” in QuickBooks Desktop
A Rebuild Data process will not correct these errors—you must resolve them manually before running a rebuild.
Fixing Transfer of Credit Errors
To correct the issue, follow these six steps. In this example, Invoice #94648 has a General Journal Entry (GJE #MK2523) that is causing a verify failure due to a Transfer of Credit Error.
Steps to fix Transfer of Credit errors in QuickBooks Desktop
Step 1: Locate the Problematic Transaction
Open the Find tool in QuickBooks (Edit > Find).
Enter the invoice number from the error message.
If you're unsure which credits were applied, click the Reports tab within the invoice and select Transaction History to review them.
Step 2: Memorize the Transaction
Memorize Transaction in QuickBooks Deaktop
Before making any changes, memorize the offending transaction.
Select Do Not Remind Me for now and name it accordingly.
This provides a backup reference if needed during the fix.
Step 3: Delete the Invoice
Note the invoice date and reference number.
Delete the incorrect invoice from QuickBooks.
Step 4: Restore the Invoice
Use the Memorized Transactions List (Edit > Memorized Transactions).
Locate the saved invoice and double-click it.
Re-enter the original invoice date and reference number.
Step 5: Save the Corrected Invoice
Save the transaction to ensure the changes are applied.
Step 6: Reapply the Credits
Open the corrected invoice and reapply the credits.
The credits should still be available for use.
Save and close the invoice.
Verify the Fix
After completing the corrections, repeat the backup procedure:
Navigate to File > Back Up Company > Create a Local or Online Backup.
Let QuickBooks verify the data.
If no Transfer of Credit Errors are found, your database is now healthy.
Congratulations! You’ve successfully resolved the error, created a reliable disaster recovery file, and restored the health of your QuickBooks database. Keeping up with regular QuickBooks maintenance will help prevent future data corruption and ensure the smooth operation of your accounting system.
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