Customer Refunds

How to process customer refunds

Written by Grainne Reidy

Updated at September 21st, 2026

Introduction

About Customer Refunds

Customer Refunds posts a Sales Debit Journal which:

Increases the selected customer's balance
Debits the customer control account
Credits the selected bank account.

Creating Refunds with VAT

No VAT can be recorded on Sales journals.

If you need to account for VAT on refunds, use:

Sales Debit Journals vs Customer Refunds

To make posting transactions more intuitive, we have split refunds from the Sales Debit Journals. This allows refunds to be created from the Bank Reconciliation screen. Either option posts the same transaction type, but:

Sales Debit Journals can only be posted to Posting GL Accounts.
Refunds can only be posted against a bank account.

See:

▶️ Sales Refunds (3.8) - AIQ Academy

Create a Customer Refund

Go to Sales > Actions > Sales Adjustment > Customer Refund.

Alternatively, go to the Customer's Bank. Under More Actions dropdown, select Create Customer Refund.

In the Refund screen, complete the following:

Customer A/C: Select the customer from the dropdown.

Exch. Rate: If you select a foreign currency Customer or Bank Account, the latest rate will be used. However, you can override it if necessary. Currency triangulation is not permitted. See the next section for more on FX refunds.
Refund Date: This defaults to today's date, but you can override it.
External Reference: Enter a mandatory journal reference number. The refund transaction will not post if it is missing. This reference is used during the Bank Reconciliation process.
Bank: Select the Bank Account from the list. If you need to post an adjustment to a GL Account, use Sales Journals.
Dimension Tag: If required, select a Dimension Tag.
Description: Enter a Description for the journal. This field is mandatory.
Refund Amount: Enter the refund amount in the customer currency.
BC Amount: This is calculated automatically for foreign currency Customer or Bank Accounts.

To finish, do one of the following:

To post the Refund without allocation click Process.
To post the Refund and allocate it, click Process and Allocate. This will open the allocation screen for the selected customer. From there you can allocate the newly posted journal as required. See Sales Receipts & Allocations for more details.
To close the screen without posting any transaction, click Close.

Foreign Currency Refunds

Supported FX Refunds

The following scenarios are supported:

Customer in the same foreign currency as the bank
Customer base currency with the bank in foreign currency
Bank in base currency with Customer foreign currency

Unsupported FX Refunds

You cannot do the following:

Process foreign currency triangulation in refunds, where both the Customer and the bank are in different foreign currencies. Instead, process the refund in two stages:
1. Process a sales debit journal.
2. Process a bank debit or credit journal.
Post refunds from the Bank Reconciliation screen if the Customer is not in the same currency as the Bank Account as the transaction may carry bank charges. You will receive an error message if you try.
Match a single bank transaction to multiple transactions using the Bank Reconciliation screen. You need to manually match them in the Bank Reconciliation screen.

To create Foreign Currency refunds:

Complete the refund details as described in the previous section.
Update the exchange rate if required. In the Refund screen, the BC Amount field will be calculated automatically.
Process as described above.