Record refunds when you export to QuickBooks

Overview

This article explains how to properly record customer refunds in ServiceTitan and ensure they export correctly to QuickBooks. You’ll learn how refund adjustments work, how they impact your accounting in QuickBooks, and the best practices for keeping both systems aligned throughout the refund process.

Here’s a quick snapshot of the entire refund process when you use QuickBooks:

1. When a customer is owed a refund, create an adjustment invoice in ServiceTitan.  The adjustment invoice will include the refunded items (negative tasks) and the refund amount (negative payment).

2. Before you reconcile your bank statements, make sure to export the invoice to QuickBooks.  The amount owed to the customer will be recorded either in an asset account or a liability account (this will depend on your QuickBooks setup).

3. You will issue the refund or void the transaction. If necessary, you will reconcile the refund / voided transaction in QuickBooks.

Important note

• When you create a refund adjustment in ServiceTitan, this is used only to create a record of the amount owed to the customer. The actual refund transaction will happen after you export to QuickBooks.

• Most refunds are processed after the original invoice has been batched, posted, and exported. Therefore, you will usually use an adjustment invoice to capture the refund in ServiceTitan.

• At the end of the month, your QuickBooks refunds payable account should be $0. If the refunds payable account is negative, this may mean that a customer refund was issued in error. Or, this means that a customer was refunded by check, but the refund adjustment was never created in ServiceTitan and exported to QuickBooks.

Best practices

When a customer is owed a refund, you should create an adjustment invoice in ServiceTitan. This will ensure that the amount owed to the customer gets reflected in ServiceTitan and in QuickBooks, keeping both systems in sync.

When you use ServiceTitan to record refunds, you'll also be able to reference refunds on the original invoice, in the customer history, or in the service location history.

Set up refunds so ServiceTitan and QuickBooks remain in sync

Decide how you would like to track refund transactions.

Option 1: Track whether or not refunds have been paid out (money has moved to the customer)

If you want to track whether or not refunds have been paid out, or if you would like to see if you have refunds still owed to customers, you will use a refund liability account. You should set up a “Refunds Payable” liability account in QuickBooks. You will also set up a “Refunds Payable” payment type in ServiceTitan (this will be mapped to the “Refunds Payable” Quickbooks account). Click here to learn more about creating payment types.

Note: If a CSR creates a refund using the original payment type (instead of “Refunds Payable”), the refund will hit the liability/asset account of the original payment type (the refund will still reconcile correctly).

Option 2: Do not track whether or not refunds have been paid out

If you do not need to track whether or not refunds have been paid out, you will map payment types directly to your QuickBooks asset or liability accounts (cash and credit card payments are usually mapped to an asset account; check payments are often mapped to a liability account). Click here to learn about payment type exporting behaviour.

Map your payment types to the appropriate QuickBooks account

In ServiceTitan, you need to map your payment types to the appropriate QuickBooks asset or liability account. Quickbooks mapping will depend on your accounting practices.

1. Go to Settings > Payment > Invoice Types.

2. Click Add Item.
    

3. In the General Ledger Account field, select the appropriate QuickBooks account. This will either be an asset account or liability account, depending on how you wish to track payments.

   Note: Cash and credit card payment types are typically mapped to an asset account (directly to the bank account where the credits will appear).

4. Check / ACH (bank transfer) payment types can be mapped either to an asset account or liability account.

5. In Export as, select Journal Entry.

6. When you are done editing the payment type, click Save. Repeat this entire process for all of your payment types.
    

Understand the refund process

If possible, you should export the refund adjustment invoice before you issue the refund (distribute funds) to the customer.

Step One: Create a refund adjustment invoice

To create a refund adjustment, the CSR or someone in the office will navigate to the original invoice, and click Add an adjustment invoice. Click here for step-by-step instructions on creating a refund adjustment invoice.

If the original invoice has not yet been exported, an adjustment invoice is not necessary. Instead, simply add the refund items (negative tasks) and refund amount (negative payment) to the original invoice.

Step Two: The adjustment invoice must include refund items

The refund adjustment invoice must include refund items (negative tasks). When adding each refund item, you must change the unit price to a negative amount, equal to the refund amount. The best practice is to use the same Pricebook items from the original invoice .*

If your services are mapped to varying income accounts, using existing Pricebook tasks will reduce the income accounts associated with each item.  However, if you use one general income account, you may opt for a single, generic Pricebook task for refunds.

Step Three: The adjustment invoice must also include a negative payment

The refund adjustment invoice must also include a negative payment.  Enter a negative amount, equal to the total refund to be distributed to the customer (including tax).*  If desired, you may also enter a Memo indicating a refund was issued.

Use the customer’s original payment type, unless the refund is being issued through a different method.  If your company has set up a refund payment type, use the refund payment type.

Step Four: Export the adjustment invoice to QuickBooks

Add the adjustment invoice to a batch. Make sure to export this batch to QuickBooks before you reconcile your bank statements.

Step Five: Once the adjustment invoice is exported, the refund transaction is recorded in QuickBooks

The refund transaction will be recorded in QuickBooks as follows:

If you use a liability account to track refunds:

• The negative tasks (refunded items) on the invoice will debit (↓) the income account, and credit (↓) Accounts Receivable.

• The negative payment (refund amount) will credit (↑) the liability account, and debit (↑) Accounts Receivable.

If you do not use a liability account to track refunds:

• The negative tasks (refunded items) on the invoice will debit (↓) the income account, and credit (↓) Accounts Receivable.

• The negative payment (refund amount) will credit (↓) the asset account, and debit (↑) Accounts Receivable.

Issuing the refund: All that's left is to issue the actual refund to the customer. See Create a refund adjustment invoice and issue a refund.

Want to learn more?

• See Create a refund adjustment invoice and issue a refund

• See Refunds - FAQ