Handling Refunds/Credit Notes

Question asked by Alex Hall 10 years ago

Hi

I need some extra advice on the process of refunding a customer. I am not sure whether I am just overlooking something simple or it is just clear books handles things differently to how i have previously.

When we need to payback a customer or owe them an amount, someone will have created a credit note for that customer for that amount. That sits on their account due to be paid.

The payment is then at some point made through the bank and when i come to importing bank transactions and explaining them in clear books i will find the said payment waiting.

At this point i want to be able to allocate that payment against the credit note and clear off that customer account but i can not. I have gathered from reading other posts that this is where the refund tab comes into use and the payment is processed using that.

However this still leaves me with the problem of a credit note on the customer account, Its all well saying to just void that after but it seems strange that i can not link the two in some way.

Also looking at the transaction of a refund it Credits the bank and debits revenue but how can it be linked to the customer in question (sales ledger).

I am doing things right here or is there something i am missing?!

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3 Replies

Hi Alex,

The best way to refund a customer is to simply create a money out transaction, which, when explained, will be described as a refund.

Within Clear Books, a credit note is created to be used for outstanding/unpaid bills and invoices. For example you can create a credit note for a supplier who owes you money and then use it to pay towards a bill that they issue.

I hope that this helps.

Chris

Best answer
10 years ago

Hi Alex

You are right CB's approach is unconventional. Ordinarily, raising a credit note (where no outstanding invoice exists), creates a debt due to the customer that can either me matched to a future invoice or against a payment to the customer.

The way to think of it in CB is that the refund document in CB replaces the credit note, so when you pay the customer, CB creates an internal credit note (prefix SRF) and pays it off. Also, with regard to your question on linking it to the customer, when explaining the refund, you pick the customers name and this makes sure the refund appears on the customer's statement.

Whilst this works for your books the downside is that it doesn't work for the customer because the SRF document is not suitable to send to them and so you have to create a credit note, send it to the customer, then void it, to be replaced with the refund. There is also a small technical problem for VAT in that, if on invoice accounting, the tax point for the transaction is the date of the credit note, whereas in CB it will be the date of the refund (ie you can't change the date of the internal credit note), obviously though, this would only be a problem if the credit note was dated pre the quarter end and the refund post.

As you spotted, this issue has been raised on a number of occasions and I'm sure will be considered in future for change.

10 years ago

Hi again - addendum

With regard to the VAT technical issue above I've just remembered you can stipulate the "Invoice" date on the refund screen which, although misnamed, determines the date of the SRF refund document which will be handled correctly for VAT if on invoice accounting.

10 years ago

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