Introduction
A Sales Refund is used when you need to return money to a customer after an invoice has already been fully or partially paid.
This typically happens when changes are made after payment has been received, such as:
Goods returned by the customer
Cancellation of a paid order
Price adjustments or discounts given after payment
In these cases, a refund is required because the customer has already paid, and the excess amount needs to be returned.
The refund process involves two steps:
Create a Sales Credit Note (without applying it to the invoice)
Create a Sales Refund to offset the credit note
This guide is for refunding via credit notes. If you are handling an overpayment scenario (e.g. customer paid more than invoice amount or duplicate payment), please refer to the Managing Customer Overpayments: Refunds and Future Invoice Offsets guide instead.
Step-by-Step Guide
Step 1: Create a Credit Note
First, you need to create a credit note for the refund amount.
Step 1.1:
👉 Refer to: Creating a Sales Credit Note, then follow and complete:
Step 1 (Choose a method to create the Credit Note)
Step 2 (Billing & Shipping)
Step 3 (General Info)
Step 4.1 (Items)
To better illustrate this, let’s go through an example that will also be used in Step 2 (Sales Refund).
Example (Step 4.1: Items) - Training / Workshop Service (Partial Refund Scenario)
A customer purchased a training package under invoice IV-00035, fully paid RM5,000.00.
However, one session was cancelled or not conducted, valued at RM1,000.00. Therefore, a refund of RM1,000.00 is required.
Enter RM1,000.00 in the Credit Note.
Step 1.2:
At Step 4.2 (Apply Credit), do not select any invoice.
This ensures the credit note remains unapplied.
Step 1.3:
Continue with Step 5 (Additional Info & Attachments) if needed.
Step 1.4:
Proceed to Step 6: Save the Credit Note.
When you click Save, a confirmation message of Unapplied Credits will appear: There're unapplied credits, do you really want to proceed?
Click OK to proceed.
The credit note will be saved as an Unapplied Credit, with status of Outstanding, which will be used in the next step to process the refund.
Step 2: Create the Sales Refund
Once the credit note is created, you can proceed to refund the customer.
Step 2.1: Choose a method to create the Sales Refund
Method 1: Add Refund from Credit Note
Navigate to Sales > Credit Note > Locate your credit note > Click the three dots (⋯) next to View > Select 'Add Refund'.
Alternatively, click 'View' to open the credit note, then click the 'Add Refund' button.
Method 2: Create manually
Navigate to Sales > Refunds > Click + New.
💡 When using the “Add Refund” method from a Credit Note, relevant details (e.g. customer, amount, and credit note reference) will be automatically filled. Simply review and update the necessary fields before saving.
We will use the “Add Refund from Credit Note” method to record a full sales refund for the example above (Training / Workshop Service – partial refund scenario) in the steps below.
Step 2.2: Billing & Shipping
Customer: Choose an existing contact (same as the credit note).
Billing & Shipping: Optional. This section will be auto-filled if default billing and shipping attention/address have been set in the Contacts module.
Step 2.3: General Info
No.: Auto-generated based on your selected number format.
Reference No.: Optional. Fill in if applicable. If the refund is created using 'Add Refund' from Credit Note, the credit note number will be auto-filled in this field.
Date: Defaults to today; change if needed.
Currency: Defaults to MYR; change if needed.
Description: Optional. A short note about this transaction; shown in reports.
Internal Note: Optional. For internal use only; not visible to customers.
Tags: Optional. Tag the transaction with department / branch / sales person / project & etc.
Title: Optional. This title appears on the document.
Step 2.4: Payment Made & Refund Credits
These two sections work together to record and apply the refund.
Step 2.4.1: Payment Made
Payment Method: Optional; choose the method used (e.g., Cash, Bank Transfer)
Pay From: Select the account used to refund the customer (usually Cash or Bank)
Amount: Auto-filled with the credit note amount (RM 1,000 in this example)
Reference No., Fee Amount, Fee Account: Optional; enter if applicable
Step 2.4.2: Refund Credits
Tick the transaction you wish to make a refund.
The system will auto-select the outstanding credit note.
The Apply Amount will auto-fill based on the credit note amount.
Since this is a full refund, no changes are required.
Step 2.5: Additional Info & Attachments
Remarks: Optional; auto-filled if a default is set under Control Panel > Company Settings > Remarks.
Attachments: Upload supporting documents, if any.
Tick Shared to send the attachment to the customer.
Unticked attachments are for internal use only.
Step 2.6: Save the Refund
Once reviewed, click Save to complete the sales refund.
The refund will be recorded under Sales → Refunds.
After saving, the credit note will be updated to Applied. You can click into it to see that the credit note is fully offset by the sales refund.
Important Notes / Tips
Sales Refund Field Explanations
The example below demonstrates how a refund is fully applied to a credit note with no remaining balance.
Payment Total
The total amount paid out to the customer for this refund transaction.
Total
The total amount of the selected credit note available for refund.
Apply Amount
The portion of the credit note being refunded in this transaction.
Balance
The remaining amount of the credit note after the refund is applied.
Refund Total
The total refund amount processed in this transaction.
Invoice Refunded
The total amount refunded that is associated with invoice(s).
Overpayment
Always shows 0.00 for refund transactions.
