Unfortunately, every business will suffer from chargebacks or will need to issue a refund to a customer sooner or later.

After a chargeback or a refund, you may be left wondering what to do, accountancy-wise. You charged the customer and issued an invoice, but the order was canceled or refunded, or the chargeback happened, and now the money is gone. What should you do with the invoice?

If you have already uploaded the invoice to the dashboard, no problem, you need to issue a credit invoice to compensate for the refund or chargeback. Don’t worry, it is quite easy.

In both scenarios, we have the following situation: There is an initial payment from the customer, say, 100€, and you issue an invoice for the customer for 100€, with invoice number xxxx, that got paid to your corporate bank account.

Then, sometime later, there is a chargeback or you refund all or part of the money to the customer. In both cases, you will issue a “credit” invoice. It is similar to a normal invoice but in negative numbers, and taking into account VAT if necessary.

So for a total refund, you will create an invoice with a different invoice number, yyyy, but the exact same data of the customer (name, address, registration code if it was a company, etc), for -100€. You will specify “refund for invoice xxxx” or “chargeback from invoice xxxx” as the invoice’s subject or concept.

If it was a partial refund, say, 20€, you will issue an invoice for -20€.

Take into account that if you applied VAT to the original invoice, then VAT has to be taken into account in the credit invoice. So if you had VAT, and the invoice was 100€+20€ VAT (for example, 20%), then if you refund a total of 24€, 20€ is the subtotal, and 4€ corresponds to the VAT, so you will specify in the credit invoice:

Subtotal                                       -20€
VAT (20%)                                       -4€
Total (including VAT)                          -24€

After generating this credit invoice, just upload it to the dashboard.

in Running your company

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