DBD: Cash Receipts - Issue a Customer Refund

DBD: Cash Receipts - Issue A Customer Refund

Before You Begin

Requirements:

• Access to Cash Receipts in DB Distributor
• Access to Accounts Payable in DB Distributor

What you will need:

• Customer code
• A reference code for the transaction (for example: PMT)
• The Accounts Receivable (A/R) ledger account number
• For invoice credit refunds: the invoice number with the credit balance

Refunding a Customer for an On-Account Credit Balance

Step 1: Zero Out the On-Account Balance in Cash Receipts

1. In Cash Receipts, post a zero deposit to the bank — enter your customer code and a reference code (for example: PMT), and enter 0.00 for the check amount.
2. Click Use On-Account — the on-account balance displays automatically.
3. Click OK — the on-account balance appears in the Distribute Amount field.
4. Click Distribute to GL.
5. Enter the A/R ledger account number.

• Using the A/R account ensures the transaction is included in standard reconciliation.
• Do not post to a miscellaneous account, as this may cause the refund adjustment to be missed in Step 2.

Click End and exit Cash Receipts Entry.Print and update the Cash Receipts Journal.

Step 2: Generate the Refund Check Through Accounts Payable

1. In the same accounting period, go to Accounts Payable and enter an invoice in AP Invoice Entry.

• The GL distribution must use the same A/R ledger account number.
• The customer must be set up as a vendor before completing this step.

During the next check run, generate the refund check.

Result

• Cash is credited for the refund amount.
• The A/R subsidiary account is debited for the credit balance.
• The customer's on-account balance is cleared from Accounts Receivable.

Refunding a Customer for an Invoice Credit Balance

Step 1: Apply the Credit Invoice in Cash Receipts

1. In Cash Receipts, post a zero deposit to the bank — enter your customer code and a reference code (for example: PMT), and enter 0.00 for the check amount.
2. Click Invoice Entry.
3. Enter the invoice number that contains the credit balance.
4. Set the Action Code to Manual.
5. Enter the full invoice amount in the Total Applied field.
6. Verify that Cash Post equals 0.00.
7. Click OK — when prompted, click OK again to continue.
8. Click GL Adjustment.
9. Enter the A/R ledger account number.

• Using the A/R account ensures the transaction is included in standard reconciliation.
• Do not post to a miscellaneous account, as this may cause the refund adjustment to be missed in Step 2.

Click End and exit Cash Receipts Entry.Print and update the Cash Receipts Journal.

Step 2: Generate the Refund Check Through Accounts Payable

1. In the same accounting period, go to Accounts Payable and enter an invoice in AP Invoice Entry.

• The GL distribution must use the same A/R ledger account number.
• The customer must be set up as a vendor before completing this step.

During the next check run, generate the refund check.

Result

• A refund check is issued to the customer for the credit balance amount.
• The Accounts Receivable balance is adjusted correctly within the same accounting period.
• The customer credit balance is cleared from the books.

Frequently Asked Questions

Q: When should I use this guide?

A: Use it when you need to refund a customer who has either an on-account credit balance or a credit balance on a specific invoice.

Q: What do I need before I can complete a refund?

A: Access to Cash Receipts and Accounts Payable, the customer code, a reference code for the transaction, the A/R ledger account number, and (for invoice credit refunds) the invoice number with the credit balance. You must also be set up as a vendor in the system before Step 2.

Q: Why must I use the A/R ledger account number instead of a miscellaneous account?

A: Using the A/R account ensures the transaction is included in standard reconciliation. Posting to a miscellaneous account may cause the refund adjustment to be missed in Step 2.

Q: How does the refund check actually get issued to the customer?

A: After the Cash Receipts step, you enter an invoice in AP Invoice Entry using the same A/R ledger account number, with the customer set up as a vendor. The refund check is then generated during the next check run.

Q: What's the difference between refunding an on-account balance versus an invoice credit balance?

A: An on-account credit balance is zeroed out using Use On-Account and Distribute to GL. An invoice credit balance is applied through Invoice Entry with the Action Code set to Manual and the full invoice amount entered in Total Applied. Both are followed by the same Accounts Payable refund-check step.

Tags: accounts-receivable, cash-receipts, accounts-payable, customer-refund, credit-balance, DB-distributor