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Paying customer refunds electronically

Typically you'll only need to electronically pay suppliers or employees. But you can also electronically pay a customer as a quick and easy way to process a refund.

Because you can't use a customer's card for electronic payments, you'll need to create a supplier card for the customer to process the electronic payment.

Before recording electronic payments

OK, let's step you through how to pay customer refunds electronically.

1. Set up for customer electronic payments


In addition to the standard setup tasks for electronic payments, there are some specific setup tasks for customer electronic payments.

  1. Create a supplier card for the customer.

  2. Record the customer's bank details on the Payment Details tab of their supplier card.

  3. Create an asset account to be used as a temporary "holding" account for customer electronic payments. Set the Account Type to Bank.

2. Process the refund


To process the refund, you'll need to create a customer credit for the original sale.

You can then complete the following steps to settle the credit and transfer its value into the asset (holding) account created in step 3 above.

  1. Go to the Sales command centre and click Sales Register. The Sales Register window appears.

  2. Click the Returns & Credits tab.

  3. Click the credit note you created, then click Pay Refund. The Settle Returns & Credits window appears.

  4. In the Account field at the top of the window, select the asset account created above.

  5. Click Record. This will record the refund against the customer card.

Next, you'll need to process the payment to the supplier card created earlier.

3. Process a Spend Money transaction


Now that the refund amount is sitting in the asset account, you need to record a Spend Money transaction to transfer it to the electronic clearing account, ready to be paid to the customer.

  1. Go to the Banking command centre and click Spend Money.

  2. Select the Electronic Payment option at the top of the window.

  3. In the Card field, select the supplier card you created above.

  4. In the Amount field, enter the amount of the refund.

  5. In the Acct No. field at line level, enter or select the asset account created above.

  6. Select the applicable Tax/GST code. Check with your accounting advisor if you're unsure what code to select.

  7. Click Record.

4. Prepare the electronic payment file


You can now prepare the electronic payment file to upload to your internet banking site. When the bank processes this file, the customer's refund will be deposited into their bank account.