Customer sales payment (refund)

Find this screen

Open: Customers > Enter Transactions > Sales Payment

Open: Cash Book > Enter Transactions > Sales Payment

Note: Use either of the Sales Payment options in the menu, there is no difference between them.

How to

Enter a sales payment (refund)

Open: Customers > Enter Transactions > Sales Payment

  1. Select the Bank account.

  2. Choose the Customer account.

  3. Enter the transaction details:

    • Enter the Transaction Date. This defaults to today's date.

    • Enter the Reference and Second reference if required.

    • Enter the Customer payment value.

    • Enter the Early settlement discount if required.

  4. Select Save.

    This does not allocate the refund, which you can only do in the Sage 200 desktop.

Enter a foreign currency payment

If you choose a customer that uses a foreign currency, enter the following additional details:

  1. Currency: The customer's currency is entered by default. Select a different currency if required.

  2. Exchange rate: The current rate is displayed.

    • To change the rate, select Change Rate. You can either enter the new exchange rate, or calculate the rate by entering the Converted value in the foreign currency.

  3. Bank charges: Enter bank charges if applicable. Bank charges are entered in the same currency as the bank account.

    Note: If you want bank charges to be included in your VAT return, then don't enter your bank charges here. Instead, you should enter the bank charges as a separate Nominal Vatable Payment or Nominal Vatable Receipt, using the appropriate VAT rate.

  4. Select Save.

    This does not allocate the refund, which you can only do in the Sage 200 desktop.

If there is an exchange rate gain or loss between the transactions, this is dealt with by Sage 200 automatically.

Useful info

About customer sales payments (refunds)

There will be occasions when you need to pay back monies received from a customer. Reasons you may give a refund include:

  • Your customer has returned or has not received goods or services they have paid for.

    If you are giving a refund for goods or services that the customer has paid for, you must first enter a credit note record in Sage 200, even if you do not provide the customer with a credit note document.

  • Your customer has overpaid for goods or services.

When you enter a customer refund, you post the amount to be refunded to the customer's account. Sage 200 then updates the appropriate account balances.

if you've received a credit note, then you should allocate the refund to this credit note. There would also be an initial invoice and payment in this scenario and you should ensure that they're allocated too.

Refunds and credit notes

If the refund is for goods or services for which the customer has already paid, you must first create a credit note record that the refund can later be allocated to.

In this scenario where the order is to be reversed:

  • The invoice is allocated to the payment.

  • The credit note is allocated to the refund.

What happens when you make a refund

When you post a refund to a customer account Sage 200 makes a number of updates:

  • The customer's account balance is updated (increased) by the value of the payment or payments posted (including discount if appropriate).

  • The bank account (for the balance sheet) in the Nominal Ledger and in the Cash Book, if used, is credited with the value of the payment.

  • The bank account (for the profit and loss) is updated with the value of any charges, if applicable.

  • The settlement discount allowed account (for profit and loss) in the Nominal Ledger is credited with the value of the settlement discount, if included.

  • The sales control account (for the balance sheet) in the Nominal Ledger is debited with the value of the payment plus any discount.

  • Any currency adjustments are posted, if applicable.

Customer sales payments (refunds) with early settlement discounts

A settlement discount is where you offer a discount if your customer pays an invoice early. You usually specify the number of days the invoice has to be paid within to qualify for the discount.

  • In the UK, if the invoice is paid within the settlement discount period, VAT is only charged on the discounted amount (Goods value minus Discount value).
  • In Ireland, VAT is calculated at the goods value regardless of any settlement discount.

If the invoice is paid within the agreed number of days, then you allow the full discount value when you enter the payment.

  1. Enter the invoice. Include the settlement discount details on the invoice. The full invoice value is posted to the customer's account.

  2. Enter the receipt. If your customer qualifies for the discount when they pay the invoice, they'll pay you the invoice total minus the discount amount. You enter this as the receipt value and you also enter the amount of the discount.

    • The discount is added to the amount received to make sure that payment matches the invoice. This is posted to the customer's account and the Debtors Control account.
    • The amount received is posted to the bank account and the discount amount is posted to the Discounts Taken nominal account.
    • For example, for an invoice of £119 with a £5 settlement discount, enter the payment amount as £114 and discount amount as £5.

You offer a settlement discount of 5%:

  1. You record the details of an invoice for £100. VAT is calculated at £20. You enter the discount percentage and amount which is £5.
  2. You receive payment for the invoice within the specified period and the customer has taken the discount, so they pay you £114. This is the gross amount (£120) minus the net discount (£5) and the discounted VAT (5% x 20 = £1).
  3. You record the receipt and enter the value as £114 and add the discount value as £5. This creates a transaction value of £119.
  4. You allocate the invoice (£120) to the receipt (£119). The VAT discount of £1 is still outstanding
  5. You create a credit note for the VAT discount of £1.
  6. You allocate this to the remaining balance on the invoice.
Example of settlement discount transactions
Transaction Nominal Account Debit Credit
Invoice Debtors Control 120  
  Net   100
  VAT   20
Receipt Discounts Allowed 5  
  Bank Account 114  
  Debtors Control   119
Credit Note Debtors Control   1
  VAT 1  

To make sure that the settlement discount details are always entered when transactions are entered for a customer, you can add the settlement discount details to the customer's account (Payment tab). The Discount percent, Discount Days are then automatically applied each time you enter a transaction for this customer.

You can change the discount details when entering an individual transaction if you need to. This does not update the customer's account. If you change the Discount Value, the Discount Percent is updated and vice versa.

Customer sales payments with a currency gain or loss

If the exchange rate used for the refund is different to the exchange rate used for the payment, Sage 200 automatically works out the currency gain or loss and posts it to the Nominal Ledger, when the refund is allocated. When this occurs, the additional transactions are posted with a reference of REVALUE, according to whether it is a currency gain or loss.

Nominal transactions for a currency gain
Nominal Account Debit Credit
Debtors Control Account Amount of gain

 
Revaluation Account   Amount of gain
Nominal transactions for a currency loss
Nominal Account Debit Credit
Debtors Control Account  

Amount of loss
Revaluation Account Amount of loss  

Refund a customer who has no customer account

When you sell to a customer who has no customer account on Sage 200 you enter the receipt as a cash (nominal) receipt (with or without VAT as appropriate). To do this, enter a Nominal Vatable Receipt or Nominal Non-Vatable Receipt in the Sage 200 desktop.

There is no specific refund facility to reverse these payments, so to record a refund you need to enter a cash payment (with or without VAT as appropriate) in the Sage 200 desktop.

Fix it

You'll see a warning if the date is in a previous year, future year, or a closed or future accounting period. The transaction can still be saved.

This could be because:

  • The customer and bank account use the same currency. You can't change the exchange rate on the refund. The refund is posted to the Nominal Ledger using the exchange rate set in Currencies and Exchange Rates in the Sage 200 desktop.

What happens when I

Save a payment

The nominal account and customer account are updated immediately, unless the transaction is dated in a future period. In this case, the transaction is posted when the period is opened.

The following table shows the nominal account postings:

Nominal account transactions for a payment (refund)
Nominal Account Debit Credit

DebtorsControl Account

 Refund Value
Bank Account Refund Value

The customer's account balance is increased by the refund value.

Save a payment with a settlement discount

The following table shows the nominal account postings:

Nominal account transactions for a payment (refund) with a settlement discount
Nominal Account Debit Credit
DebtorsControl Account Total refund value: refund +discount
Bank Account Refund Value
Discounts Allowed Discount Value

The customer's account is increased by the total refund value.

Save a foreign currency payment

The Nominal Ledger is updated. This table shows the nominal account postings:

Nominal account transactions for a foreign currency payment (refund)
Nominal Account Debit Credit
Debtors Control Account Payment value in base currency
Bank Account Payment value in base currency

The customer account is reduced by the payment (refund) value in the original currency.

If the payment (refund) is allocated to an invoice, and there is an exchange gain or loss, the following nominal account postings are made:

Nominal account transactions with an exchange gain or loss
Nominal Account Debit Credit

Debtors Control Account

 Gain

Loss
Revaluation Account Loss Gain

Sage is providing this article for organisations to use for general guidance. Sage works hard to ensure the information is correct at the time of publication and strives to keep all supplied information up-to-date and accurate, but makes no representations or warranties of any kind—express or implied—about the ongoing accuracy, reliability, suitability, or completeness of the information provided.

The information contained within this article is not intended to be a substitute for professional advice. Sage assumes no responsibility for any action taken on the basis of the article. Any reliance you place on the information contained within the article is at your own risk. In using the article, you agree that Sage is not liable for any loss or damage whatsoever, including without limitation, any direct, indirect, consequential or incidental loss or damage, arising out of, or in connection with, the use of this information.

See also

Customer sales invoice