Learn how and when to record a refund receipt or a refund cheque to a customer depending on the situation.

Refund for goods or services that didn’t satisfy the customer

  • A Type 1 refund provides a Refund Receipt to record reimbursements to customers via cash, cheque, or credit card.
  • This does not affect the customer balance – accounts receivable; only the bank balance.

A refund would be needed if, for example, a customer paid for an item but is returning it for a full or partial refund.

Follow these steps for a Type 1 refund to create a Refund Receipt:

Note: Make sure a credit memo has not already been entered to avoid a double refund.

  1. Select Create (+) from the Toolbar.
  2. Under Customers, select Refund Receipt.
  3. Select the same product/service you are refunding and enter the exact amount of the refund.
  4. Fill out the necessary fields, then select Save and close.
Note If you set up a credit card account for your customer, it will be the default account for the payment method. Make sure the payment method is tagged accurately to avoid a double refund.

 

Pay the customer their outstanding credit balance

  • A Type 2 refund allows you to provide your customer with a refund cheque to offset any open credits they would like paid out.
  • This affects the customer balance – Accounts Receivable

This type of refund would be needed if, for example, a customer has a store credit (overpayment) that they would like to have paid out or redeemed for cash.

Follow these steps for a Type 2 refund to create a Cheque or Expense

Note:  We are using an "expense" transaction in order to both reduce the bank balance (credit) and increase A/R (debit).

  1. Select Create (+) on the Toolbar.
  2. Under Suppliers, choose Cheque or Expense.
  3. In the Account column, choose Accounts Receivable.
  4. Enter overpayment amount in the Amount column.
  5. In the Customer column, choose the customer.
  6. Select Save and close.

Pair the Cheque or Expense with the credit or overpayment you are refunding.

  1. Select Create (+) from the Toolbar.
  2. Under Customers, choose Receive Payment.
  3. Fill out the following fields:
    • Customer
    • Date
    • Payment Method
    • Reference No.
    • Deposit To
    • Memo (Optional)
  4.  Select Cheque or Expense that you created.
  5. Select Save and close.
    Note: 
    • If you set up a credit card account for your customer, it will be the default account for the payment method. Make sure the payment method is tagged accurately to avoid a double refund.
    • If you have an outstanding transaction, make sure you link the cheque or cash purchase to open credit or unapplied payment.

 

Refund for a prepaid order the customer hasn't received Example:

  • A Type 3 refund is used when a client makes a down payment or prepayment but cancels the order before receiving the goods or services. In this case, the customer did not receive an invoice or sales receipt. The option will lead you directly to entering a cheque.
  • This affects the customer balance - accounts receivable

This type of refund would be needed if, for example, a customer prepaid for an order which has been cancelled, and you need to refund the payment.

Follow these steps for a Type 3 refund to create a Cheque or Expense

Note: We are using an "expense" transaction in order to both reduce the bank balance (credit) and increase A/R (debit).

  1. Select Create (+) from the Toolbar.
  2. Under Suppliers, choose Cheque or Expense.
  3. In the Account column, choose Accounts Receivable.
  4. Enter overpayment amount in the Amount column.
  5. In the Customer column, choose the customer.
  6. Select Save and close.

Pair the Cheque or Expense with the credit or overpayment you are refunding.

  1. Select Create (+) from the Toolbar.
  2. Under Customers, choose Receive Payment.
  3. Fill out the following fields:
    • Customer
    • Date
    • Payment Method
    • Reference No.
    • Deposit To
    • Memo (Optional)
  4.  Select Cheque or Expense that you created.
  5. Select Save and close.
Note: 
  • If you set up a credit card account for your customer, it will be the default account for the payment method. Make sure the payment method is tagged accurately to avoid a double refund.
  • If you have an outstanding transaction, make sure you link the cheque or cash purchase to open credit or unapplied payment.

 

Refund the customer for paying too much Example:

  • A Type 4 refund allows you to provide a refund when a customer overpays and you want to give the customer's money back (cash or a cheque) for the amount overpaid.
  • You may either use the Cheque or Expense features to record the refund.
  • This affects the customer balance - accounts receivable

This type of refund would be needed if, for example, a customer over-paid an invoice, and you need to return the excess money.

Follow these steps for a Type 4 refund to create a Cheque or Expense

(Note: We are using an "expense" transaction in order to both reduce the bank balance (credit) and increase A/R (debit)).

  1. Select the Plus icon (+) on the Toolbar.
  2. Under Suppliers, choose Cheque or Expense.
  3. In the Account column, choose Accounts Receivable.
  4. Enter overpayment amount in the Amount column.
  5. In the Customer column, choose the customer.
  6. Select Save and close.

Pair the Cheque or Expense to a credit or overpayment that you are refunding.

  1. Select the Plus icon (+) on the Toolbar.
  2. Under Customers, choose Receive Payment.
  3. Fill out the following fields:
    •  Customer
    • Date
    • Payment Method
    • Reference No.
    • Deposit To
    • Memo (Optional)
  4.  Select Cheque or Expense that you created.
  5. Select Save and close.
Note: 
  • If you set up a credit card account for your customer, it will be the default account for the payment method. Make sure the payment method is tagged accurately to avoid a double refund.
  • If you have an outstanding transaction, make sure you link the cheque or cash purchase to open credit or unapplied payment.

Now you're able to refund customers for overpayments.