There are different reasons why a refund might have to be processed. The customer might have returned the product, you might have created an incorrect invoice, or the wrong credit card was charged. This are just a few of the reasons. While all of those refunds can be processed the same way, it might be appropriate to create refunds differently, based on the current scenario. We are going to look at the possibility to create refunds from invoices directly, posting credit memos, and just refunding the payment directly from the customer ledger entries to be able to pay with a different card.
NAV-X Credit card automatically determines, if the credit card transaction can be voided or a refund needs to be processed. If the refund is processed the same day of the credit card charge, the transaction can usually be voided. If a transaction is voided, it will not show up on the customer’s credit card statement. Only if it is refunded, the original charge and the refund will be listed on the statement.
Cancel or Correct Invoices
When need to cancel or correct an invoice, you can use the the functions “Cancel” or “Correct” directly from the posted sales invoice. This is available starting with Microsoft Dynamics NAV 2017.
However, you can only cancel or correct an invoice, if the invoice isn’t paid yet. This poses an issue with credit card payments, since the invoice is paid immediately when it is posted. Therefore, when trying to cancel or correct an invoice that was paid via credit card, you will now see a warning message explaining that the invoice was paid via credit card and the credit card payment first has to be refunded. If you select “Yes”, the system will process a refund for the credit card used to pay the invoice and then will cancel or correct the invoice.
Credit memos are usually applied to invoices to cancel out an invoice. Sometimes credit memos can also be used to create a “credit on account” for a customer that then can be applied to a later purchase. If you want to refund a transaction to a credit card, you have to apply the credit memo to an invoice that was paid via credit card. When the credit memo is posted, the transaction then is automatically refunded to the original card used on the applied sales invoice.
If you want to refund a credit memo to a credit card and this credit memo is not applied to an credit card invoice, you can process the refund of the credit memo through the Customer Ledger Entries as described below, after the credit memo was posted without being applied to an invoice.
If you process returns via return orders, you can also process credit card refunds. You can enter a credit card on the sales return order or you can use the action “Add Credit Card” on the ribbon. When the return order is posted, it will post a credit card refund. The process is similar to the Credit Memos process described above.
You cannot process credit card refunds for credit memos or return orders, if they are not applied to an invoice that has been paid via credit card by default. Banks don’t always allow a “refund on account” also called “open credit”. If you are certain that you can process open credits, you can enable the “Allow Open Credit” option in the credit card setup. Please contact your gateway representative to understand, if you can or cannot process open credits.
Customer Ledger Entries
It is also possible to refund a credit card from the Customer Ledger Entries page, which is accessible from the Customer Card or List by selecting “Ledger Entries”. The “Refund to Card” action is only available, if the transaction can be refunded. The following table shows when the action can be refunded.
If the invoice is not paid or applied and has a negative amount.
If the credit memo is not refunded or applied. Credit Memos can be refunded to a credit card, even if the original transaction was not a credit card transaction. This is called an “Open Credit”.
If the payment is open (not applied)
If you want to refund money to a credit card and the original transaction has been paid with a credit card, the refund is processed against the original credit card. If the original transaction has not been paid by credit card, the “Refund Credit Card” page is shown, which allows you to enter one or multiple cards and the amounts that should be refunded to each card. The process of using multiple cards for a refund is the same as authorizing multiple cards for a charge.