Follow the steps below to record a credit card charge that was disputed, commonly called a chargeback.
To record a credit card chargeback with no associated returns or sales then you should create an unassociated refund to the customer’s account. You must have a cash drawer open and change your processing date back to the date that the chargeback happened then:
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Go to the Customers>Payment/Refunds screen and select the “Refund” button
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Enter in the amount of the Credit Card chargeback amount in the “Refund” field.
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Select the Method of refund as your credit card type.
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Select the cash drawer
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If you wish, enter a note in the memo field explaining the refund.
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Uncheck any items selected in the grid view showing all open transactions.
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Then select “Save Refund” button.
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You will receive a message box that says: Confirm: 0.00 of your refund has not be applied to any transactions. Do you want to continue?
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You will click on “Yes”
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Next you will see the Process Credit Card screen and you will choose the “Bypass Processing” button.
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Another screen will come up saying; Confirm Bypass and your options are “Yes” or “No”.
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Please select yes.
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Another screen will come up saying successfully saved refund.
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Your customer's Payments/refunds screen will show this refund but it will not affect the customer balance.
NOTE: Unassociated refunds do not create any transaction. They post a Credit to the Bank GL and a Debit to the default refunds GL in the accounting defaults
Now that you have recorded the payment out of the bank account, charge this amount to bad debt:
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Create a statement charge with a reason code that is the same as the refund reason you used for the unassociated refund (Administration > Accounting > General Setup > Statement Charge Reasons).
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Then create a credit memo with a credit memo reason code assigned to Bad Debt (Administration > Accounting > General Setup > Credit Memo Reasons).
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Apply the credit memo to the statement charge.