How to process a customer refund?

I logged an accounts receivable sales invoice about 3 weeks ago but the customer has returned an item.

How do I process a refund or cancel the invoice transaction on Manager?

Here is the link for already answered question:

Actually even that answer is now out of date since we have added new tab Debit notes which replaces earlier approach by journal entry.

As for customer refund, simply issue customer new Credit note. You will need to enable Credit notes tab.

So when I issue this credit note because I have refunded the customer where does the original customer payment end up, does it go to an expense journal?

When you issue credit note, don’t select matching invoice so the credit from credit note will be applied to Customer advance payments account.

Then actual payment should be categorized under Customer advance payments account.

I am a little confused , when i open the Credit Note tab , there is an option at the bottom to choose the customer invoice , but i cannot find a category for Customer Advance payments?

Don’t select any invoice. If no invoice is selected, credit will be applied to Customer advance payments account.

I will try this later today, in the past I have just deleted the sales invoice entirely if I had to refund a customer, but this is not the right way to refund in accounts.

Exactly, once you send invoice to customer. Never delete it. Who knows, customer might pocket the refund and claim your invoice on his tax return as a business expense. If your accounts ever get audited, you will get in trouble for deleting invoices.

Yes I entirely agree with you, if you delete an invoice for any reason it just looks suspicious.

I tried this and yes the refund is showing in customer advance payments (liabilities) but the amount is showing in the suspense account and net profit has not been deducted, where should I put this, into a new account?

When you created credit note, what did you select under Account column?

I did not know what to select in the Account column so left it suspense, should I create an account for refunds?

That’s one way or simply use exactly the same account(s) you initially used on the original sales invoice.

Excellent, thank you it works like a charm!

The profit figure has now been updated to show the correct figure as i have refunded this customer.

Thank you so much for your help on this matter.

I just tried this with a refund of a customer. I have to refund a partial shipping fee for an item arriving late (post office refunded me, which in turn I refunded the customer). However now it shows that the customer has a credit of $63.96, however I already sent him back the money so he shouldn’t have a credit at all. Is there a way to fix this or am I doing something wrong?

@seforimdeals, did you issue a credit note?

See: Guides | Manager

Keep in mind, in your case you are not cancelling the invoice, only “portion” of it.

I issued a credit note, yes.

Could it be that the problem is that the invoice was already paid in full? Is that why there is an extra amount of credit in the customers balance?

Into which account did you allocate the refund of $63.96? Can you show the screenshot of transaction in Manager which is recording this refund?