Create a refund for an overpayment

Overview

There are three different refund workflows in ServiceTitan to account for various overpayment scenarios: refunds for applied payments, unapplied payments, and credit card payments. Each workflow ensures accurate financial tracking and proper adjustments based on how the original payment was recorded.

Workflow	Key steps	Why it works this way
Refund for applied payment	Adjustment invoice with negative payment	The refund is reversing a payment that was already applied to an invoice, so a simple negative payment is enough.
Refund for unapplied payment	Adjustment invoice with refund invoice item then apply overpayment	Since no invoice exists to tie the payment to, an adjustment invoice and credit are needed to track the refund properly.
Refund for credit card payment	Adjustment invoice with refund invoice item, apply overpayment, delete refund invoice item, add negative payment	Since credit card refunds affect the business's bank balance, ServiceTitan needs to track the refund as a negative payment while also adjusting the invoice records.

Who uses this feature

Administrators, office employees, managers, accountants, and bookkeepers
Applies to all business types
Applies to all trades

Feature configuration

Account configuration is required to use this feature. Please contact Technical Support for details.
Permission is required to use this feature. Please contact the account administrator on your team.

Things to know

With Payment Collections, you can no longer add a negative payment directly on the original invoice. Review your workflow and see if any adjustments need to be made.
The method of refunds below are for overpayments or duplicate exported payments.
For job refunds, see Create a refund adjustment invoice and issue a refund.

Add a refund service item in pricebook

Before you create a check or credit card refund, add a refund service in your pricebook using these parameters:

Name: Refund invoice item.
Description: To capture refund of payment from customer. This invoice item will offset the AR of the payment to refund and increase Refund Liability.
Unit Price: Leave it at $0.
General Ledger Account: Map your service to a general ledger (GL) account used to track refund liability.

Note: After you add the refund service in your pricebook, use it every time you need you to create a check refund.

Create a refund for an applied payment

For applied payments, refunds are processed by creating an adjustment invoice and recording a negative payment, ensuring accurate financial tracking while maintaining the correct Accounts Receivable balance.

To refund an applied payment:

Go to the navigation bar and click Search .
From the search dropdown, select Payment then click Search .
Click the payment you want to refund.
On the invoice record that opens, create an adjustment invoice for the payment:
1. In the side menu, click Add an adjustment invoice.
2. On the confirmation pop up, click OK.
3. Click Add a payment:
  1. Amount: Enter a negative payment for the amount you want to refund.
  2. Type: Refund payment type.
  3. Paid On: Date refund initiated.
  4. Memo: Additional details about the refund.
    Note: The memo appears on the customer invoice.
  5. Authorization Code: If the payment type is a credit card or ACH, enter the authorization code, if available.
    Note: This can be done for any payment type: cash, check, credit card, or ACH.
4. When you're finished, click Save.
Export the negative payment to your accounting system.

Create a check refund for an unapplied payment

Checks can't be refunded directly from ServiceTitan. To ensure proper accounting, create a refund record in ServiceTitan so the refund creates a balance in your Refund Liability account or the equivalent liability account. You can then issue a check to your customer from your accounting system.

Note: You can process ACH and credit card refunds directly in ServiceTitan.

To create a check refund for an unapplied payment:

Go to the navigation bar and click Search .
From the search dropdown, select Customer then click Search .
Select the customer you want to create a refund for.
On the customer record that opens, click Invoices.
From the Invoices section, click Collect Payment.
Under Payment Details select Credits.
In the Available Credit tab, click the invoice number next to the payment credit you want to refund.
On the invoice record that opens, click Add an adjustment invoice.
On the confirmation pop up, click OK.
In the side menu, click Add a service.
Enter the refund service item details you created for check refunds:
1. Name: Refund invoice item.
2. Description: Refund description.
3. Quantity: Leave the quantity at 1.
4. Unit Price: Payment amount you want to refund.
5. General Ledger Account: Map your invoice item to a GL account used to track refund liability.
When you're finished, click Save. Now your adjustment invoice has a service item with the same amount as the payment you want to refund.
From the adjustment invoice, click the original invoice link.
In the side menu, click Collect and apply payment.
Under Payment Details, select Credits.
In the Available Credit tab, select the credit you want to refund.
Under Apply Payment, select Apply to Invoice.
Select the adjustment invoice you created for the refund.
When you're finished, click Save.
Export both the adjustment invoice and the payment credit that was applied to the adjustment invoice to your accounting system.

After you export the refund, you can issue a check from QuickBooks to your customer.

Create a credit card refund

Credit cards can be refunded from ServiceTitan if the payment was originally processed through ServiceTitan. To refund a credit card you need to reverse the payment by reducing your Bank GL account balance without passing the transaction through a Refund Liability account. Therefore, recording credit card refunds involves negative payments rather than invoice tasks.

To refund a credit card:

Go to the navigation bar and click Search .
From the search dropdown, select Payment then click the Search .
Click the payment you want to refund.
On the invoice record that opens, click Add an adjustment invoice.
On the confirmation pop up, click OK.
In the side menu, click Add a service.
Enter the refund invoice item details you created in your pricebook:
1. Name: Refund invoice item.
2. Description: Refund description.
3. Quantity: Leave it at 1.
4. Unit Price: Payment amount you want to refund.
5. General Ledger Account: Map your service item to a GL account used to track refund liability.
When you're finished, click Save. Now your adjustment invoice has a service with the same amount as the payment you want to refund.
From the adjustment invoice, click the original invoice link.
In the side menu, click Collect and apply payment. The Collect and Apply Payments screen opens.
Under Payment Details, select Credits.
Select the payment credit you want to refund.
Under Apply Payment, select Apply to Invoice.
Select the adjustment invoice you created for the refund.
When you're finished, click Save.
Go to the invoice where the payment was applied and process the refund.
After you process the refund, remove the invoice item that was added to the adjustment invoice because you don't need this invoice item since the credit card payment has been applied to the invoice:
1. In the Adjustment Invoices section of the invoice, click the Pencil icon for the adjustment invoice you want to remove the refund service.
2. Click the x icon next to the refund service you want to remove.
Add a negative payment to the adjustment invoice equivalent to the amount you want to refund:
1. Click Add a payment and add a negative payment equivalent to the amount you want to refund.
2. When you're finished, click Save.
Export both positive and negative payments to your accounting system.

Want to learn more?

Visit ServiceTitan Academy to enroll in Invoice Adjustments
See Payments