Xero: How to Reconcile a Partial Refund of a Settled Payment

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 Partial Refund of a Bank or Card Payment with Business or 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 partially refunded
4. In the Reference field, type the original Invoice number that is being partially refunded
5. Add line items to match the original Invoice being partially refunded (ensuring the Qty, Unit Price, Account, Tax Rate, and Total match exactly)
6. Next, reduce either the Unit Price of all Line Items equally or remove individual Line Items as necessary to bring the total down to the partial value being refunded.
7. Click Approve
8. In the Make a cash refund area below the Credit Note details, ensure the Amount matches the full balance of the Credit Note
9. Set the Date as today
10. In the Paid From field, choose CCCLEAR - Pinch Payments Clearance Account
11. In the Reference field, type the Refund ID supplied by Pinch for the partial refund (it will look like this: ref_ABC12D3FG4)
12. Click Add Refund

STEP 2 - 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 partial 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 partial refund (it will look like this: ref_ABC12D3FG4))
8. Set the Qty as 1
9. Set the Unit Price as the partial value of the Invoice being refunded
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!