Acumatica
ERP
Video
Tutorials
Subscribe

Customer Refunds in Acumatica ERP

February 28, 2019

Today’s tip from CS3 Technology is how to process a Customer Refund in Acumatica ERP.

We are going to start with an overview of the complete process, then we will walk through the Customer Refund steps.

I am going to use T-Accounts that accountants are familiar with.  Don’t worry though if you are not an accountant.  I will go through this quickly and get to the demo ASAP.

This all started when we sold some widgets to our customer.  And then, happily, he paid us for them.

Later, the customer decided there was a problem with one of the widgets and returned it for a refund.  In accounting, we process a Credit Memo.  There are some other things that happen in the inventory system that I am skipping over because our focus here is the accounting side of things.  

The next transaction will be where we start our demo.  We create a transaction in the Accounts Receivable module that is a special type of payment called a Customer Refund.  This transaction removes the credit balance in the Customer’s account, but where do we put the offset?  We will look at this more closely when we are processing this transaction in the demo, but because this is a type of payment in Acumatica, we will use the cash account to temporarily hold this amount.  You will see that we remove it a bit later.  You do not want to use a cash clearing account here, if you have clearing accounts set up in your system.

Once we release the Customer Refund, we have the Customer’s Receivable account where it needs to be, but we haven’t cut a check yet and we have that credit sitting in the cash account we need to deal with.

Now, in Accounts Payable, we create a Bill or a Quick Check if you prefer.  The account we enter the debit to in the Bill will be our cash account we used earlier, which will offset the amount we processed with the Customer Refund transaction.  All, we need to do now is cut the check.

Let’s look at how we do this in Acumatica.

We have our Customer Invoice, which has been paid and closed.  The Credit Memo has been entered but is open.  This is where we will apply our Customer Refund.

In Accounts Receivable, we create a new special kind of payment with the type of Customer Refund.  When we go to find the Document to Apply this to, you see that we have three choices.  Since our payment was fully applied to the original invoice, we don’t have the option to apply this to a closed document, so we created the Credit Memo and we will apply the Customer Refund to that memo.  Once we release the Customer Refund transaction, the customer’s account is where we need it.

Next, we need to cut a check.  If you try to create an AP Bill for this customer, you won’t find them in the list because they are a customer and not a vendor.  But, Acumatica has a special function that helps in this regard.  You can make a customer into a vendor and vice versa.

On the Customer Maintenance screen, under Actions, we need to Extend the Customer to a Vendor.  This will create a Vendor record with the same ID as the customer.  You just need to add in the vendor class and make any other tweaks that you may have in your system, like attributes and such.  Save the new vendor.  Now we can add a new bill for the $500 we owe the customer.  

When we enter the bill, we need to make sure that we debit the same cash account we used in the Refund transaction so the two will offset each other.  

The next steps you should be familiar with.  Release the bill.  Create a check.  Print and release.

Our account balances are now where we need them.  Our cash has been appropriately reduced and the sales have been reduced as well.  All the other accounts used in the process net to zero.

I hope you don’t have to process customer refunds very often.  One of the reasons I wanted to make this video was to help you get all the pieces together whenever you do have to do this.  

For more information and more Acumatica videos, visit us at CS3Technology.com/videos.

Get Access to our extended Educational Video Library

Thank you! Your message has been sent and one of our team members will reach out to you shortly.
Oops! Something went wrong while submitting the form.