Refund Transactions are used when a customer has paid you twice (you have received a duplicate receipt) or has overpaid and you will be returning the money to them instead of reducing their next invoice.

In the case of a supplier, it is the same, except they are returning the money to you, instead of reducing your next purchase invoice.

Duplicate Receipt (or Payment)

For example: a customer pays you twice for one invoice.

Firstly, if you have not already, enter the original customer invoice as normal.

Then on the bank feed screen select CR (Customer Receipt) against the first receipt and link it in the usual way by selecting the invoice and paying in full.

Now if you drill down on your customer, you will see the invoice and the first receipt from them.

Next select a MI (Money In) transaction for the duplicate receipt coming into the bank. Use a category such as Misc./Suspense to keep it out of your normal accounts. As this is a duplicate it is not allocated to the Customer Ledger as there is no invoice for it.

When the refund is paid, the payment is entered as a Money Out entry, coded to the same Misc./Suspense category. This will reduce the category balance back to 0.

Overpayments from a Customer (or to a Supplier)

If you have received an overpayment from a customer where a proportion of it will need to be refunded, this cannot be processed directly to the ledger as there is no corresponding invoice.

Allocate the whole receipt including the over payment from the bank feed to a manual bank account e.g. a refund account.

Go to Banking – Bank Accounts and select Add New Bank Account:

Create the new bank account and make sure the entry method is set to manual:

We would recommend calling this bank account something like “Refund Transaction” or “Nil bank account” as a reminder that the balance on this account should always come back to zero.

Save Bank Account.

Then from the manual bank account process 2 entries; a Customer Receipt to clear the invoice, with the balance being entered as a Money In entry coded to a Misc/Suspense category to keep it out of your normal accounts.

For example: You have an invoice for £120 but an over payment of £140 has been made.

Code the entire bank feed entry to the manual bank account

In the manual account, process a customer receipt for £120 to clear the invoice and another entry as Money In for £20 coded to the Misc./Suspense category.

Your manual bank account should then come back to 0 to show that everything has been processed.