Understanding Payments and Refunds

Payments and refunds can look similar because both involve money moving between you and a client. The important difference is whether you are correcting a payment or changing the value of the sale.

What a recorded payment means

A recorded payment confirms that money was received for an invoice. It updates the paid amount and the remaining balance, and it becomes part of the invoice history.

Why a payment cannot be deleted

A payment stays in the history because it represents money that was received. Removing it would make the invoice totals and sequence of events harder to understand. If it needs correcting, record a reversal instead. This keeps the original receipt and the correction together.

When to use Payment reversal

Choose Payment reversal when the sale is still valid but all or part of a payment needs to be undone.

Use it for a payment entered twice, a returned bank payment, a chargeback, or money sent back while the original invoice charge still applies.
The invoice sale value and tax stay the same.
The invoice balance increases by the reversed amount, so a replacement payment can be recorded later.

When to use Refund for cancelled or reduced sale

Choose Refund for cancelled or reduced sale when the amount the client should pay has changed because part or all of the sale no longer applies.

Use it when work is cancelled, the agreed scope becomes smaller, an item is returned, or the invoice price needs a genuine reduction.
The sale value is reduced and the related tax is adjusted.
A credit note supports the change and keeps the client balance clear.

Options available with each subscription

Starter: Payment reversal is available. This gives you a clear way to correct returned or mistaken payments while preserving the original payment history.

Partner and Team: Payment reversal, refunds for cancelled or reduced sales, credit notes, and overpayment returns are available.

A reduced sale refund changes the value of the sale and may also change tax and client credit. Those additional financial adjustments are included with Partner and Team.

Choosing the right option

If the sale is still correct and only the payment needs to be undone, choose Payment reversal.
If the client should now owe less because the sale changed, choose Refund for cancelled or reduced sale.
If the client paid more than the invoice total, use Return Overpayment when that option is available.

Recording a refund

Open the invoice and go to Payments and Refunds.
Select Refund beside the payment you need to correct.
Choose the reason when more than one option is available, then enter the amount, date, method, and reference.
Review the details and save the refund. The original payment remains visible beside the correction.

Important:

Recording a refund does not send money to the client. Return the money through your bank or payment provider first, then record what happened in clientfam.