Processing a Refund from a Creditor/Supplier in a Client/Trust Account

For our Asia-Pacific customers, the term "Trust Account" is used, while European customers refer to it as "Client Account". It's important to mention that the Client/Trust Accounting functionality does not apply to customers in North America. For further information on regional terms, check out our Glossary of Regional Terminology.

At times, you may receive a refund from a creditor that needs to be given back to the owner. In this article, we provide a guide on how to process such a refund within your Client/Trust Account, ensuring that you can accurately reflect this transaction in your financial records. We'll cover creating an expense credit note, marking it as paid, and reconciling the funds within your bank statements.

Creating an Expense Credit Note

To record a refund from a supplier, first create a new expense credit note:

1. Navigate to the Income & Expenses section and select Create Expense Credit Note.
2. In the From field, enter the creditor's contact name.
3. Use the same Account Code that was used on the original expense invoice that was incorrectly paid to the creditor. 
4. Ensure all other details are accurate and select the appropriate ledger for the funds being returned.
5. Click Save & Approve to finalize the credit note.

Processing the Refund

With the expense credit note created, proceed to allocate the credit and process the refund:

1. Open the newly created expense credit note and select Allocate Credit from the menu options.
2. On the following screen, choose Refund to process the payment received.

Reconciling with the Bank Statement

The final step is to reconcile the transaction in your bank statement:

1. Navigate the the Client/Trust Accounts tab and click the View Bank Statements link.
2. Locate the received transaction in your bank statement.
3. Match and reconcile this against the paid expense credit note, which will appear as an unpresented deposit.
4. The funds will now be sitting as a credit against the selected ledger.

Following these steps will allow you to complete the refund process accurately. Remember to regularly review your bank reconciliations to maintain the integrity of your financial data and avoid any discrepancies.