Note: Do you know the difference between a refund and a credit. A refund is immediately returning money to a customer or being given money from a vendor. A credit is where the money is saved as a "credit" that can later be applied against (or deducted from) a customer's invoice or a vendor's bill.

An income refund is recorded by creating a negative invoice. Let's take an example of giving a partial refund of $20 on a $240 invoice.

Steps

  1. To create the refund, go to the Invoices page.

2. Next, find the customer invoice in the transaction history list and right-click it. This will pop up the option to Refund.

3. Clicking on Refund will create a refund invoice. Next, enter the Date and adjust the Amount (if it is a partial refund). In our example, we are giving a partial refund of $20, so we change the $-240 invoice to $-20.

4. Next, scroll down and select Show Options.

5. In the Payments section, select the date and bank account the refund was sent from.

The refund will appear on the transaction list as shown below.

A few fields to pay attention to are:

  • Terms or Payment Account: This is where you choose which account to use to pay the customer back. For example, if you paid the customer back using funds from your bank account, you'd choose bank account.

  • Income Account: You choose the same account that was used on the original invoice.

  • Price: Make sure to enter in the amount as a negative since it's a refund. For example, $-20.

  • Sales Tax: If you charged Sales Tax on the original invoice, use that same sales tax code.

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