Xero: How to Reconcile a Partial Refund of an Unsettled Payment with Payer Paid Fees paid from a Bank Account

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 Payment with Payer Paid Fees that has been NOT yet 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. 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 partial refund (it will look like this: ref_ABC12D3FG4)
11. Click Add Refund

STEP 2 - Adding an Invoice for the Surcharged Transaction Fees

1. From the Business menu, go to Invoices
2. Click on New Invoice
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 1 line item with the Description: Pinch Payments Payer Surcharge for Payment Payment Gateway fees for Payment [INVOICE NUMBER] (replacing [INVOICE NUMBER] with the original Invoice number that is being partially refunded)
6. Set the Qty as 1
7. Set the Unit Price as the fee portion of the Pinch Payment that is being partially refunded (you can find this by viewing the Payment in Pinch and looking at the Total Pinch Fee line in the subtotals summary) minus GST (divide the total by 1.1).
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 Exclusive
11. Click Approve
12. In the Receive a payment area below the Invoice details, ensure the Amount matches the full balance of the Invoice
13. Set the Date as today
14. In the Paid From field, choose CCCLEAR - Pinch Payments Clearance Account
15. In the Reference field, type 'CC - ' followed by the original Invoice number that is being partially refunded
16. Click Add Payment

STEP 3 - Adding a Bill for the Transaction Fees

1. From the Business menu, go to Bills to pay
2. Click on New Bill
3. In the From field, choose PinchPayments - hello@getpinch.com.au
4. In the Reference field, type the 'CC - ' followed by the original Invoice number that is being partially refunded
5. Add 1 line item with the Description: Payment Gateway fees for Payment [PAYMENT REFERENCE] (replacing [PAYMENT REFERENCE] with the original Invoice's payment reference from Pinch (you can find this by viewing the Payment in Pinch and looking at the Payment Reference line beneath the subtotals summary))
6. Set the Qty as 1
7. Set the Unit Price as the fee portion of the Pinch Payment that is being partially refunded (you can find this by viewing the Payment in Pinch and looking at the Total Pinch Fee line in the subtotals summary) minus GST (divide the total by 1.1).
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 Exclusive
11. Click Approve
12. In the Make a payment area below the Bill details, ensure the Amount matches the full balance of the Bill
13. Set the Date as today
14. In the Paid From field, choose CCCLEAR - Pinch Payments Clearance Account
15. In the Reference field, type 'CC - ' followed by the original Invoice number that is being partially refunded
16. Click Add Payment

STEP 4 - Adding a Receive Money Transaction for the Settlement

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 Receive Money transaction from the dropdown
5. In the From 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: Settlement of 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 Net value settled by Pinch for the Invoice that is being partially 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 Exclusive
13. Click Save
14. When you upload your Bank Statement that shows the settlement of the remainder of the transaction that is being partially refunded, you will be able to match it to this Receive Money Transaction + the Spend Money Transaction you will making in the next step!

STEP 5 - Adding a Spend Money Transaction for the Refund

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 settlement of the remainder of the transaction that is being partially refunded, you will be able to match it to this Spend Money Transaction + the Receive Money Transaction you made in the previous step!