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Re: partial refund on closed invoice

Hi David,

On Sat, Jun 1, 2013 at 1:58 PM, David <..hidden..> wrote:
I have an AR invoice for let's say $100 which has been paid and closed.

Subsequently I want to reduce the amount of the original invoice by
let's say $50 and refund the balance.

In this case, you would probably create a credit invoice. This gives you a document which you can send your customer. On the notes section it could list the details of the bank account you'll be using to execute the refund.

Then, you make a payment from your bank account to theirs. Instead of entering a payment, you enter a negative receipt through the Cash -> Receipts interface. That clears out the balance of the credit invoice.
In another case, I have a closed AR invoice, but a partial payment by
credit card has now been charged back by the bank. I have to treat this
as a (partial) bad debt. It's rather similar to the first scenario above.

Well, having a bad debt is a bit different from having an unsatisfied customer (and refunding because of that).
Can I anyone tell me what the correct work flow is?

If you have a bad debt, you need to create a write-off. This means you should record the amount charged back by the bank as an expense in your business. If you have been taking money from your profits, putting it aside for cases like these (creating a "provision bad debts"), you might want to nullify the effects on your books by releasing the same amount from your provision.

If the above is a bit too compact, please let me know and I'll try to create a more comprehensive description of bad debt, provisions and the process you might want to use.



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