MS BOOKKEEPING SERVICES
Bookkeeping Help Blog
Bookkeeping Help Blog
|Posted on May 18, 2022 at 3:15 PM|
Issuing refunds is a part of almost any kind of business whether you offer services or products.
Maybe someone overpaid an invoice, a customer didn’t like the product, or the service/product sold resulted in damage.
So, how do you go about issuing a refund and setting that up in your financial records?
Refund Best Practices:
One of the policies you should have for your business is a refund policy. Although you might be in a business where refunds are rare, it is still beneficial to have guidelines in place.
The policy should have information regarding what would be considered for a refund such as:
- Damage to the product
- Product was never shipped
- Service wasn’t completed
- Amount of bill was overpaid
The number of days after purchase until a refund is no longer considered is also important to note. For instance, if you only process refunds for items/services purchased before 30 days, then you will want to have that written within your policy.
Another thing to keep in mind is how the refund will be processed. A few options for a refund are:
- Returning the amount to the card that was used
- Crediting the amount to the customer’s account for future purchases
- Applying the amount to the next open invoice
Setting Up Your Process
After you have your policy in place, it’s time to consider your process.
Typically, a credit memo will be sent to the client or customer notifying them of the amount that will be refunded.
You can include a link to a PDF view of the credit memo or have the information in a document that is attached to the email. When setting up the memo it should include, all participants’ information, the invoice number, a description of the product or service included in the refund, and the amount being refunded.
A refund will then be sent either manually from your business account or through the software your business uses. One software that is capable of refunds is https://quickbooks.intuit.com/oa/get-quickbooks/" target="_blank">QuickBooks.
It’s also best to ask the client or customer why they want a refund, so you can fix various areas of your business and incur fewer refund occurrences.
Now, that you have taken care of everything on your client’s end, it’s time to take care of everything on your end.
Tracking refunds in your financial records is going to be extremely important.
The best way to track refunds is by first tracking the original sale, the payment of that sale, and then noting the return amount for that purchase.
If you would like help tracking your financial records, it’s best to look for bookkeepers online or in your area such as https://mksbookkeepingservices.com/" target="_blank">MS Bookkeeping Services.
Categories: Bookkeeping Tips