Best way to refund customers

Nearly all my companies transactions are internet based.
I programmatically extract transactions from our backend and then use the API to post them to Sales Invoices and Bank Receipts in Manager.
Occasionally a user cancels their order after we have received payment, so we need to refund them.
One would think a Credit Note would be the answer, but this does not post to Accounts Payable and I can’t find a neat way to handle connecting the Bank Payment (refund) to the Credit Note.
So I have been creating negative invoices instead which is rather inelegant.

Would appreciate any guidance on a better way

A credit note is not supposed to post to Accounts payable. It posts to Accounts receivable for the customer. So does the payment. Read the Guide:

Negative sales invoices are definitely not elegant. However, conceptually, that is what a credit note is.

But I wonder why you are bothering with sales invoices at all. You have already been paid by the time you have the order. Why enter the receipts directly as cash sales? See this Guide: Then, if you have a refund, see this one:

Thanks @Tut.
I agree, should just be raising receipts.
Sometimes hard to see the forest for the trees…

The only downside with cash sales is the inability to track customers’ buying history.

That’s no probs, we do that in our backend :slight_smile:

But if I stayed with the invoice method, is there a better way to handle refunds where a bank transaction paying the refund needs to be linked to the refund?
I think I read that using a credit note for a refund does not adjust inventory.

Not true. Credit notes adjust inventory as well as the Accounts receivable balance for the customer. Read the Guide again. As long as you generate the credit note from the sales invoice or select the sales invoice when creating a credit note manually, the invoice number shows on the face of the credit note:


Thanks @Tut.
So to take this to the final step of the bank transaction refunding the customer payment, are you advising to click the “Receive Money” button on the Credit Note form and create a negative “Bank Receipt”?

I will say it one more time: read the Guide I linked to on credit notes. Payments are the last section.

Thanks for your gracious help tut!