Create a refund adjustment invoice and issue a refund

Overview

Use this method only if you do not have the Automated Refund workflow set up. You can create refund adjustment invoices to issue customers refunds. This ensures that the amount owed to your customer is recorded when you export invoices.

Note: The Automated Refund workflow simplifies the refund process by automatically creating the refund adjustment invoice and walking you through the refund process. We recommend you use this process when issuing refunds. For more, see Set up automated refund workflow.

Things to know

• You can issue partial refunds or credit card transactions only with ServiceTitan Payments. Once you do that, make sure to export the refund adjustment invoice before reconciling your bank statements.

• You can only issue partial refunds or credit card transactions when using ServiceTitan Payments. Partial refunds are not allowed for check / ACH transactions.

• When to issue a refund: You can issue refunds at any time. However, make sure the refund adjustment invoice is exported before you reconcile your bank statements.

• Make sure you follow the Complete the refund process workflow for all refunds.

• Mobile check deposits cannot be refunded.

• Adjustment invoices can be generated after an invoice has been either posted or exported, with no option for creating adjustments in an open or pending invoice.

• You can't refund invoices in bulk.

• The refund process typically takes 3 to 7 business days, depending on the bank you use.

• You must have a negative Pricebook service and a negative payment on the refund adjustment invoice. Not including a negative payment will give you a negative balance in your Accounts Receivable reports.

Complete the refund process

1. Issue the refund first. If you use ServiceTitan Payments, you can do this in ServiceTitan.        

   Note: If you use QuickBooks, you may need to reconcile the refund transaction in QuickBooks.

2. In ServiceTitan, create a refund adjustment invoice. Include the refunded items, such as negative services, and the refund amount (for example, negative payment).

3. Export the refund adjustment invoice before you reconcile your bank statements. The amount you owe to the customer will be recorded either in an asset account or a liability account. This will depend on how you've set your accounting.        

   Note: When exporting negative payments to QuickBooks you will need to export it as a Journal Entry. If you don't select Journal Entry for negative payments, then you will see an error message in Pending Export Report.

Create a refund adjustment invoice

1. Search for and go to the invoice you want to issue a refund from.

2. In the invoice, click Add an adjustment invoice. 

3. Click OK. An adjustment invoice is created.

4. Add the items you want to refund to the adjustment invoice. These are the items that will be partially or fully refunded. For example, to add a refund service, click Add a service. 

5. Enter the Pricebook item from the original invoice.        

   Tip: Search for the Pricebook item by entering the code or keyword in the Name field. Depending on your company's accounting practices, you may be using a single, generic Pricebook item for refunds.

6. Change the Unit Price of the Pricebook item to a negative amount equal to the refund amount. For example, if the original invoice was $298.00, change the Unit Price amount to $ –298.00. 

7. When done adding the refund item, click Save. Repeat steps 4 through 8 for each refund item.        

   Note: In addition to adding the refund item(s) (negative services) to the adjustment invoice, you also need to add a negative payment to the adjustment invoice.

8. Click Add a payment to add a negative payment. Use the customer's original payment type, unless the refund is being issued through a different method. If your company has set a refund payment type, use that refund payment type. 

9. In the Amount field, enter the payment as a negative amount equal to the total refund to be distributed to the customer, including taxes. If needed, use the Memo field to note that the payment is a refund. 

10. When done, click Save. The balance on the original invoice should be net 0. The total on the adjustment invoice will be a negative amount equal to the total refund to be refunded to the customer.        

    Note: Make sure to click Save when you create the negative payment. Don't click Charge as Payment processors will not allow charges in negative amounts. Once the adjustment invoice is complete, accounting can add it to a batch and export to QuickBooks.

11. While the net balance on the original invoice is net 0, the original invoice total will remain the same. The printed invoice version will reflect the corrected refund total.
    Remember:        

    1. The adjustment invoice must include refunded items. The Unit Price of each refunded item must be a negative amount equal to the refunded amount.

    2. The adjustment invoice must also contain a negative payment equal to the total refund (including tax).

Issue refunds in ServiceTitan

Account configuration is required. This workflow works only if you have ServiceTitan Payments. To sign up for ServiceTitan Payments or learn more about how it works, see Overview of ServiceTitan Payments.

To issue refunds in ServiceTitan

1. Go to the navigation bar and click the search icon.

2. Click the dropdown and select Invoice, and then enter the invoice number.

3. In the invoice, go to the Payments section.

4. Find the item you want to refund and click the Refund icon. 
   The Process customer refund popup appears. You'll see the details of the original payment, including the Payment Type, Amount, payment date, and transaction ID.         

   Note: If this was a credit card payment, you'll see Edit, which allows you to issue a partial refund and then enter the refund amount you want. Partial refunds can be issued for credit cards only.

5. When ready to process the refund, click Submit Refund. The refund automatically goes through your merchant portal, so no need to log in to the merchant portal. You see confirmation that the refund has been processed along with the following items: 
   On the invoice, you'll see a Refunded tag next to the payment. If the payment was partially refunded, a Partially Refunded message will be added next to the payment. 
   Make sure you have created a refund adjustment invoice. The refund adjustment invoice should be exported before you reconcile your bank statements. If you have Automated Refunds turned on, you no longer need to manually create negative payments or adjustment invoices.

Information for QuickBooks Users

Setting up refunds to keep QuickBooks and ServiceTitan in sync

To set up refunds to keep QuickBooks and Servicetitan in sync, visit How to record refunds when you export to QuickBooks to guide you through the refunds workflow for QuickBooks users, including how to set up payment types for QuickBooks refunds.

Issuing a refund with a liability account

If you are issuing the refund by cash, check, or credit card

• Write a check from QuickBooks to offset the liability.

• Make sure to do this whether the refund is being issued by cash, credit card, or check. In QuickBooks, go to Banking > Write Checks > Select the Customer > Select the refunds payable (liability) account. In the expense tab, enter the amount being issued. When you do write the check, you should do it out of the refunds payable (liability) account, which will debit liability and credit the cash account.

If you are issuing a credit card refund

• Once the money has moved, you will reconcile the transaction on the bank statement with the exported negative payment from ServiceTitan.

Issuing a refund with no liability account

If you are issuing the refund by cash

• Issue cash to the customer according to your company's accounting processes (remember: the refund amount has already been deducted from your asset account during export).

If you are issuing the refund by check

• Do not write the check from QuickBooks. This will result in the refund being deducted twice. Remember: The refund amount has already been deducted from your asset account during export).

If you are issuing a credit card refund

• Once the money has moved, you will reconcile the transaction on the bank statement with the exported negative payment from ServiceTitan.

Want to learn more?

• See Payments