Step by Step:
Follow the steps below to record a credit card charge that was disputed, commonly called a charge back.
To record a credit card charge back 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 charge back happened then:
Step 1: Go to the Customers>Payment/Refunds screen and select the “Refund” button
Step 2: Enter in the amount of the Credit Card charge back amount in the “Refund” field.
Step 3: Select the Method of refund as your credit card type.
Step 4: Select the cash drawer
Step 5: If you wish, enter a note in the memo field explaining the refund.
Step 6: Uncheck any items selected in the grid view showing all open transactions.Step 7: Then select “Save Refund” button.
- 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?
- You will click on “Yes”Step 8: Next you will see the Process Credit Card screen and you will choose the “Bypass Processing” button.
- Another screen will come up saying; Confirm Bypass and your options are “Yes” or “No”.
- Please select yes.
Step 9: Another screen will come up saying successfully saved refund.
Step 10: Your customers 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:
Step 1: 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).
Step 2: Then create a credit memo with a credit memo reason code assigned to Bad Debt (Administration > Accounting > General Setup > Credit Memo Reasons).
Step 3: Apply the credit memo to the statement charge.