Xero: How to Reconcile a Full Refund of a Settled Payment with Payer Paid Fees

IMPORTANT: Depending on the amount to be refunded, the payment method used, and the settlement status of the payment, you will need to perform different actions. 

This article covers reconciling the Full Refund of a Bank or Card Payment with Payer Paid Fees that has already been Settled to you.  Other articles relating to reconciling refunds can be found here.

STEP 1 - Adding an Accounts Receivable Credit Note for the Invoice

1. From the Business menu, go to Invoices
2. Click on New Credit Note
3. In the To field, choose the Contact who’s Invoice is being refunded
4. In the Reference field, type the original Invoice number that is being refunded
5. Add line items to match the original Invoice being refunded (ensuring the Qty, Unit Price, Account, Tax Rate, and Total match exactly)
6. Click Approve
7. In the Make a cash refund area below the Credit Note details, ensure the Amount matches the full balance of the Credit Note
8. Set the Date as today
9. In the Paid From field, choose CCCLEAR - Pinch Payments Clearance Account
10. In the Reference field, type the Refund ID supplied by Pinch for the refund (it will look like this: ref_ABC12D3FG4)
11. Click Add Refund

STEP 2 - Adding an Accounts Receivable Credit Note for the Surcharged Transaction Fees

1. From the Business menu, go to Invoices
2. Click on New Credit Note
3. In the To field, choose the Contact who’s Invoice is being refunded
4. In the Reference field, type the original Invoice number that is being refunded
5. Add 1 line item with the Description: Fee Refund for Invoice [INVOICE NUMBER] (replacing [INVOICE NUMBER] with the original Invoice number that is being refunded)
6. Set the Qty as 1
7. Set the Unit Price as the fee portion of the Pinch Payment that is being refunded (you can find this by viewing the Payment in Pinch and looking at the Total Pinch Fee line in the subtotals summary)
8. In the Account field, choose CCEXPENSE - Pinch Payments Fees
9. Set the Tax Rate as GST on Expenses
10. Ensure Amounts are is set as Tax Inclusive
11. Click Approve
12. In the Make a cash refund area below the Credit Note details, ensure the Amount matches the full balance of the Credit Note
13. Set the Date as today
14. In the Paid From field, choose CCCLEAR - Pinch Payments Clearance Account
15. In the Reference field, type the Refund ID supplied by Pinch for the refund (it will look like this: ref_ABC12D3FG4)
16. Click Add Refund

STEP 3 - Adding an Accounts Payable Credit Note for the Transaction Fees

1. From the Business menu, go to Bills to pay
2. Click on New Credit Note
3. In the From field, choose PinchPayments - hello@getpinch.com.au
4. In the Reference field, type the original Invoice number that is being refunded
5. Add 1 line item with the Description: Fee Refund for Invoice [INVOICE NUMBER] (replacing [INVOICE NUMBER] with the original Invoice number that is being refunded)
6. Set the Qty as 1
7. Set the Unit Price as the fee portion of the Pinch Payment that is being refunded (you can find this by viewing the Payment in Pinch and looking at the Total Pinch Fee line in the subtotals summary)
8. In the Account field, choose CCEXPENSE - Pinch Payments Fees
9. Set the Tax Rate as GST on Expenses
10. Ensure Amounts are is set as Tax Inclusive
11. Click Approve
12. In the Make a cash refund area below the Credit Note details, ensure the Amount matches the full balance of the Credit Note
13. Set the Date as today
14. In the Paid From field, choose CCCLEAR - Pinch Payments Clearance Account
15. In the Reference field, type the Refund ID supplied by Pinch for the refund (it will look like this: ref_ABC12D3FG4)
16. Click Add Refund

STEP 4 - Adding a Spend Money Transaction for the Refund Recovery Debit from Pinch

1. Go to Dashboard from the menu options
2. Click on the Xero Bank Account that Pinch settles funds to
3. Click + New Transaction
4. Ensure it is a New Spend Money transaction from the dropdown
5. In the To field, choose PinchPayments - hello@getpinch.com.au
6. In the Reference field, type the Refund ID supplied by Pinch for the refund (it will look like this: ref_ABC12D3FG4)
7. Add 1 line item with the Description: Refund ID [Pinch Refund ID] (replacing [Pinch Refund ID] with the Refund ID supplied by Pinch for the refund (it will look like this: ref_ABC12D3FG4))
8. Set the Qty as 1
9. Set the Unit Price as the Net value settled by Pinch for the Invoice that is being refunded (you can find this by viewing the Payment in Pinch and looking at the Total Received line in the subtotals summary)
10. In the Account field, choose CCCLEAR - Pinch Payments Clearance Account
11. Set the Tax Rate as BAS Excluded
12. Ensure Amounts are is set as Tax Inclusive
13. Click Save
14. When you upload your Bank Statement that shows the Refund Recovery Debit from Pinch, it will auto match and allow you to reconcile the transaction in one click!