Refunds vs. Chargebacks in QuickBooks

when money goes back to a customer, it doesn't always mean the same thing — and quickbooks needs to handle each case differently this article explains the difference between a refund and a chargeback, how regpack records each one in quickbooks, and what you can do to keep your books clean what is a refund? a refund is something you start you go into regpack, find a customer's payment, and choose to send money back this usually happens when a customer drops out of a program before it starts was charged too much or charged twice is receiving a partial credit as a goodwill gesture returned something when you issue a refund, the relationship is being wrapped up cleanly you and the customer are agreeing to reverse the transaction in quickbooks, a refund is recorded as a refundreceipt it reduces the money sitting in undeposited funds and shows up correctly when you reconcile your next payout deposit if you also remove the matching cart line in regpack, a credit memo is posted to bring the customer's balance back to zero what is a chargeback? a chargeback is something the customer starts — without asking you first they call their bank, say they want to dispute a charge, and the bank pulls the money out of your account right away the customer may still be in your program they may still be expecting to show up your staff has no idea anything changed but the payment is gone unlike a refund, a chargeback does not close the relationship the customer hasn't withdrawn you haven't agreed to reverse anything that means your books need to show that the customer still owes you the money — otherwise, anyone looking at their account will think they've paid in full in quickbooks, regpack handles this with two steps a refundreceipt to record the cash that left your account a journal entry that puts the amount back on the customer's balance, so the open amount is visible why it matters both a refund and a chargeback move money out of your account and back to the customer the dollar amount looks the same but what they mean is very different refund chargeback who starts it you the customer (via their bank) is the customer still active? usually not often yes cash leaves your account yes yes customer balance after $0 (if cart is also removed) still shows what they owe risk if handled wrong small unapplied credit customer gets service without paying if a chargeback is treated like a refund, the customer's quickbooks account looks paid your delivery team, front desk, or customer service staff may never know there's a problem — and the customer receives a service they haven't actually paid for the strict mode setting regpack's quickbooks integration has a setting called strict mode that controls how refunds are handled chargebacks always get the two step treatment (refundreceipt + journal entry) in both modes the difference is what happens with voluntary refunds strict mode (default — recommended) every negative payment event — refund, chargeback, cancellation — posts both a refundreceipt and a journal entry the customer's balance goes up until something else (a cart removal, a credit memo, or an accountant's write off) brings it back to zero use strict mode if more than one person at your organization works with the same customers you want your books to flag anything that hasn't been fully reconciled you've ever had a situation where service was delivered to someone who hadn't actually paid standard mode refunds post only a refundreceipt and don't touch the customer's balance chargebacks and other involuntary reversals still post both documents use standard mode if one person handles every refund from start to finish, including the cart adjustment you want ar aging reports that an outside accountant can read without a tutorial you're comfortable with the occasional unapplied credit balance in edge cases not sure which to use? leave it on strict it creates a little more clean up work in the short term, but it cannot quietly swallow a chargeback into a "looks paid" state how the mode locks once any refund, chargeback, or cancellation syncs to quickbooks for your project, the mode locks you cannot switch between strict and standard through the settings after that this is intentional switching mid stream would leave half your customer records on one model and half on the other, with no way to tell them apart at year end if two of your regpack projects share the same quickbooks company, they must use the same mode when you connect a second project, it inherits the mode that's already locked — silently, with no additional setup required on your end if you genuinely need to change the mode after it has locked, contact us at support\@regpacks com regpack support can override the lock in situations where a change is needed what you'll see in quickbooks after a $300 refund paired with a $300 cart removal strict mode customer balance is $0 quickbooks shows the original invoice, the payment, the refundreceipt, the journal entry, and the credit memo everything offsets cleanly standard mode customer balance is −$300 (an unapplied credit) the credit memo reduces ar, but because the refund didn't raise it, the credit sits on the account until it's applied or written off after a $300 chargeback both modes customer balance is +$300 they owe you this is the correct outcome in both modes the open balance is visible to anyone looking at that customer's record need help? if your quickbooks records look off after a refund or chargeback, or if you need to change your strict mode setting after it has locked, contact us at support\@regpacks com and let us know which records are affected