If you have received a chargeback or a returned Payment from a Customer and are unsure of the easiest way to document this, here are two (2) examples of processes that can be utilized to record the payment reversal.
When recording a returned Payment, the goal is to have the Invoice returned to having an open balance, and for the Payment amount to be reversed. You may also need to record a returned Payment fee for which the Customer is liable.
We will first review the standard process, which is a quick and efficient way to record these transactions and ensure that the Customer’s open balance is reflected. This process can be utilized when the Payment did not take place within a closed period, and no taxes have been paid for the Payment.
Process #1:
Unapply the Returned Payment from the Invoice
The first step to recording the returned Payment is to unapply the Payment on the Invoice. When viewing the paid Invoice, select the Applied Credits/Payments option from the menu bar.
This will open the Applied Credits/Payments window, where you can view the Payments which have been applied to the Invoice.
To unapply a Payment, select the Unapply option located next to the Payment that has been returned.
Striven should prompt a warning message asking if you “wish to unapply the Payment”; click OK to move forward.
The Payment will no longer display within the Applied Credits/Payments window, and you will receive an alert message stating that the “Payment has been successfully un-applied.”
The Invoice will now show an open balance and the option to Receive Payment.
Add a Returned Payment Fee to the Invoice
Once the Payment has been unapplied and the Invoice is open, you can add any returned check fees, or returned Payment fees, incurred by the return.
Within the Line Item section of the Invoice, you can add a Line Item for the Returned Payment Fee.
- Note: It is recommended to use a Non-Inventory Item Type or a Discount Item Type for this fee.
The Memo field is a great place to record information about the returned Payment for future reference.
Once you are finished adding the fee to Invoice, save your changes.
Reverse the Payment via Refund
The final step to recording the chargeback is to process a refund within Striven for the returned Payment. Navigate to the Payment Info page for the returned Payment. Select Actions from the menu bar.
From the Actions drop-down menu, select the Give a Refund option.
Once selected, the Give a Refund window will open, allowing you to choose the method of the refund, bank account from which the funds are being removed from, and the date of the refund. No Class should be associated with the refund being processed. It is strongly recommended to insert a brief memo describing the returned Payment for future reference.
Process #2:
This process is ideal for scenarios where the returned Payment, or chargeback, was originally tendered in a now closed period. This method allows you to record the Invoice as needing Payment, while avoiding duplicating revenue and ensuring that your outstanding tax liability remains correct.
Unapply the Returned Payment from the Invoice
The first step to recording the returned Payment is to unapply the Payment on the Invoice. When viewing the paid Invoice, select the Applied Credits/Payments option from the menu bar.
This will open the Applied Credits/Payments window, where you can view the Payments which have been applied to the Invoice.
To unapply a Payment, select the Unapply option located next to the Payment that has been returned.
Striven should prompt a warning message asking if you “wish to unapply the Payment”; click OK to move forward.
The Payment will no longer display within the Applied Credits/Payments window, and you will receive an alert message stating that the “Payment has been successfully un-applied.”
The Invoice will now show an open balance and the option to Receive Payment.
Create Credit Memo
Select the Actions tab located on the Invoice’s menu bar, and choose the Credit Memo option from the drop-down menu.
Selecting the Credit Memo option will open the Add Credit Memo page. When creating the Credit Memo, it is important to ensure that all Line Items from the Invoice are added to the Credit Memo.
It is recommended to add a memo to the Credit Memo describing that the transaction was created to record a returned Payment. Then create the Credit Memo by selecting the Save option at the bottom of the page. Once created, the Invoice will be closed.
Reverse the Payment via Refund
Navigate to the Payment Info page for the returned Payment. Select Actions from the menu bar, then choose the Give a Refund option from the drop-down.
Once selected, the Give a Refund window will open, allowing you to choose the method of the refund, bank account from which the funds are being removed from, and the date of the refund. It is strongly recommended to insert a brief memo describing the returned Payment for future reference.
Create a New Invoice
After the refund has been processed, the final step is creating a new Invoice to record the Customer’s outstanding balance by copying the original Invoice. Navigate to the original Invoice, and select the Actions option from the menu bar, then choose the Copy option from the drop-down.
Copying the Invoice will allow you to add a new Invoice containing the same Customer information, Payment terms, and Line Items. You will need to manually select the Sales Order which the Invoice should be associated with.
If a returned Payment fee is applicable, you may add it to the Invoice’s Line Items at this time.
- Note: It is recommended to use a Non-Inventory Item Type or a Discount Item Type for this fee.
The memo field is a great place to record information about the returned Payment for future reference.
Once you are finished adding the fee to Invoice, save your changes using the Save options at the bottom of the page.
These processes allow you to record the reversal of Customer Payments, while ensuring that the Invoices are reverted to an unpaid and open status.
Note: These methods of recording returned Payments in Striven are suggestions. That said, it is essential to consult with your accountant to ensure that this approach aligns with your company’s accounting guidelines.
If you have any questions regarding this process, please don’t hesitate to contact Striven Support for assistance. 