(MF-5) Managing Credits and Refunds

So now we know how to create invoices and payments, and the different ways we can connect the two together using allocations.
Part of what we have learned is that it is possible to record client credits... but how do we use this ability in real-world scenarios? This lesson takes a look at how best to manage credits, and if necessary, issue and record refunds.

Accurately Record Your Invoices, Payments and Allocations

The first key thing to realise is the importance of recording credits accurately. If you are not completely familiar with the concepts we have already discussed in this chapter about managing finances, it is very easy to accidentally end up with incorrect and unpaid invoices and incorrect and un-allocated payments recorded in the app. The effect of this is that you cannot accurately track who owes you money, and who's money you are holding in credit, and the integrity of the financial part of your admin system is broken.
So the first key point in managing credits is to understand the topics discussed in the previous five lessons so that you correctly manage invoices or payments which are not correct, and make sure that all of your payments are immediately allocated to appropriate invoices wherever possible.

Issuing a Refund

Because there is this important link between invoices and payments, then the process of issuing a refund involves two parts.

Changing Invoice Information

First, you need to make the change in the invoices world to reflect the different price a client is going to pay. This can be done either by:
  1. 1.
    Completely cancelling a booking, if this is the scenario you are dealing with. See lesson MF-2 for the ways to do this.
  2. 2.
    Manually modifying the original invoice. This is great for giving a discount, and should not be used in the case of a complete cancellation. Details of how to do this are in lesson MF-7.
  3. 3.
    Creating a new invoice with a negative amount. This is known as a credit note, and is also best used for discounts rather than complete cancellations. See how to do this in lesson MF-2.
Be aware that methods 1 and 2 will automatically update the payment to include the necessary credit, while using method 3 will require you to manually allocate the credit note you have created with the necessary payment(s). Details of how to do this are in the final part of lesson MF-4.
If you are using Workshop Angel as the basis of your accounting information, and your accounts need to accurately record invoice dates, then you are best to use method 3 (Credit Notes) to record a discount.

Issuing a Refund Against a Payment

The processes described above will create a payment which contains a credit, and this can be refunded to the client using the steps defined in the latter part of this lesson.

How a Payment Credit is Created

So what exactly is a payment credit? It is important to understand that:
A payment contains a credit if it is not fully allocated to one or more invoices.
This can occur in the following situations:
  • Overpayment - a client accidentally over pays for a booking / invoice.
  • Cancellation - if you cancel an invoice as described in lesson MF-2, then any associated payments will be de-allocated from that invoice and will therefore contain a credit.
  • Change of Invoice Items - if you change the items on an invoice to lower the invoice total then this may cause one or more payments to have a lower allocation to that invoice and therefore contain a credit.
  • Allocation of a Credit Note - as discussed in lesson MF-2, it is possible to create an invoice with a negative amount invoiced, which is known as a Credit Note. This can be allocated to a payment and has the effect of reducing the total allocations, and therefore creating a credit.
  • Creation of a Payment that you don't allocate to an invoice - if you create a payment and don't create an invoice to allocate it to, then the payment will sit as a credit on the client's account.

How to View Payment Credits

Finding All Payment Credits

You can very simply find all the payments which contain a credit, to be sure that each payment credit is a true reflection of what has happened in your business.
  • Go to the Finances - Invoices and Payments area
  • Check the box [ ] Show All Credits Only.
This will automatically show all of the credits that are recorded in your Workshop Angel account, and WILL IGNORE whatever other search options have been set for the Payments area.
So for example, in this scenario we searched for payments from Freddy Full, and got this payment list:
If we then select the Show ALL credits only option, then we are no longer looking for payments made by Freddy, we are now just looking for ALL payments containing a credit:
Which in this case is just a credit for Percy Peck.

Finding Payment Credits Which Match the Other Search Criteria

If we perform a search with both of the "credits only" options un-checked, then we will find both the fully allocated payments and the payments containing a credit. In the example below, we list the four payments for Percy Peck, one of which contains a credit:
If we then check the "Show searched - credits only" option, we only see the payments that meet the search criteria, AND contain a credit.
In our example, this returns the one payment containing a credit for Percy Peck:

How to Allocate a Credit to a New Booking

You may find that you are holding a credit for a client, who wishes to use that credit on a booking they make at a future date. In the design of Workshop Angel, we have decided not to automatically take that credit into account at the time of booking, to avoid your clients being given a credit that you have accidentally created within the app.
There are a few different ways you can handle this situation.
If the new activity allows either a deposit payment or payment by bank transfer, you can ask your client to choose one of those methods that doesn't require full card payment at the time of booking. Once the booking comes in then you can allocate the credit amount to the invoice for this new activity.
If neither of the above are true, then you could use the following steps:
  • Create an activity specific discount code for the amount of the credit
  • Ask your client to book with this code.
  • Once they have booked, edit the new booking's invoice item to be the normal activity price. (See how to do this in lesson MF-7)
  • The new booking should now have an amount outstanding equal to the credit amount.
  • Allocate the payment containing the credit to the new booking's invoice - see lesson MF-4 for how to do this.

How to Issue a Refund

It may be that you agree with the client who has a credit that you will issue them with a refund.
In order to maintain a correct record of what payments you have received at what time, it is important not to delete the original payment item in the app. Instead, you will find an option in the Payment window when the payment contains a credit for you to issue a refund:
  • Open the Payment containing the credit
A payment containing a credit has a Refund section:

To issue the refund:

  • Select the [Enter refund details] checkbox
  • Enter the amount of the admin fee the client should pay for making the refund. (If there is no fee to be charged, enter 0)
  • Click on the [Refund XXX] button
At this point, lots of things will happen in the background... so let's look at what those are!

How a Refund Works

Here is what happens when you perform a refund...

Creation of Refund Item

A Refund item is created in the database to record the refund made. A Refund item is actually just a Payment item with a negative payment amount. You will now find both the original payment and the refund listed for the client:

Creation of Cancellation Admin Fee Invoice

Over on the Invoices side, you will find an invoice has been created for the cancellation admin fee:

Allocations Made

In order to keep all the allocation data correct, both the original payment (£100 in this case) and the refund (-£80) are allocated to the admin fee invoice. This ensures that the payment and refund are fully allocated, and the invoice is fully paid.
These allocations can be seen when you view the individual payment and refund items.
Note that if you specify 0 as the admin fee amount, then this admin fee invoice is still created, and the payment and refund are both allocated to it.
So in this example, they would have been for £100 and -£100, making a correct sum of £0 for the invoice's allocations.

Refund of Card Payment

If the payment had been made by card, then issuing a refund in Workshop Angel will create a refund to the client's card via your Stripe account.
The money will typically arrive on their card account in the following 5-10 days.
There will be a Stripe fee for this transaction of typically 1-2%, which will be taken from your Stripe account.
If the payment was made in a foreign currency (i.e. one that is not your designated Accounting Currency), then this will all be taken into account by the Stripe refund process.

Refund of non Card Payment

For other payment types such as Bank Transfer, the Refund item will be created in Workshop Angel, but you will need to arrange that payment to occur yourself.
Please note that you can use the non-card refund process for payments made in a foreign currency, but there is currently no ability to record the amount of the transaction in your local Accounting Currency.

Sending Email to the Client

When the refund has executed, an email is sent to the client to inform them that this has happened.
Currently the content of this email is not customisable - the wording is set within the app.
Here is how the email looks:
The email for a card refund is similarly worded, and explain that the refund could take up to 7 days to arrive on their account. This length of time is currently specified by Stripe for refunds.


We have looked at the importance of accurately managing client credit amounts, how you can search for credit amounts, how to allocate credit amounts to a new booking, and how to issue a refund to a client.
In the next lesson, we will learn how to manage the schedule of payments you are expecting a client to make for attending your activity.