Refunds, Credits and Write-Offs

Availability: all plans

Giving money back or reducing a balance is done in four separate ways, and the product keeps them apart because each affects your books differently. A refund returns money already taken. An invoice credit says the sale was worth less. An account credit gives the customer a balance without changing any sale. A write-off abandons money that was owed. All four start from the invoice or the customer record.

Before you start

Refunds, invoice credits, account credits and refunds of a credit balance need permission to issue refunds and credits.
The write-off panel needs separate permission to write off balances.
To refund a payment, open the invoice that the payment belongs to.

Steps: refund a payment

Open the invoice. In Payment History, select Refund beside the payment.
In Issue Refund, choose How is the money going back? The options are Cash, Check, Card (external), ACH (external), Wire transfer and Other. Reverse the charge is added only when the payment went through the processor and your refund window is still open.
Check Refund Amount. It starts at what remains refundable and cannot be more. If your processor supports only full refunds, the amount is fixed.
For any method except Reverse the charge, add the External reference (required for the external card and ACH methods), Refunded on, and a Reason.
Select Refund.

Reverse the charge is sent to the processor and goes back to the original card or account. The other methods only record money you returned yourself; nothing is sent to a processor.

Steps: issue a credit against an invoice

On an issued invoice (not a draft or void one), find Issue Credit.
Enter Credit amount, which cannot exceed the invoice total, and an optional Why.
Select Issue credit against this invoice. The panel states that this reduces what the sale was worth and returns the tax with it, and the credit goes to the customer's balance.

Steps: account credit, applying credit and paying a balance out

Open the customer, then the credit balance section on their Billing tab.
To give credit that names no invoice, enter Amount and Why and select Issue account credit. No sale changes and no tax moves.
To use a balance, open an invoice with an amount due. Apply Customer Credit appears when the customer holds credit. Enter the amount for each source, enter Amount to apply, and select Apply credit to this invoice.
To record a refund you already paid from a credit balance, complete the Record a paid refund fields and select Record paid refund. Only money the customer paid in is refundable; credit you issued is not paid back as cash. This records your payment; it does not send money.

Steps: write off a balance

On an invoice with an amount due, find Write Off Balance.
Choose Reason: Uncollectible or Forgiven. Nothing is preselected.
Leave Amount (optional) blank for the whole balance, or enter part of it.
Select Write off this balance and confirm. The customer is not told and nothing is refunded.

Tips

Choose the write-off reason carefully. Uncollectible records a bad-debt expense; Forgiven reduces revenue. Ask your accountant if unsure.
If the Reverse the charge option is missing, a note under the method explains why.

If something goes wrong

Refund amount must be greater than zero. Enter a positive amount.
Select a payment to refund. Open the refund from a specific payment.
Credit amount must be greater than zero, and Choose credit sources whose amounts add up to the amount being applied. Match the source amounts to the total.
Choose whether this balance is uncollectible or forgiven. Pick a reason.
If the Refund button is missing, the payment may be fully refunded or your role lacks permission.

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