Modified on Tue, 24 Jan 2023 at 04:01 PM

In this article, you will learn about how to process a refund in Actionstep and where to find a list of all refunds made. 

WARNING: You are not able to process a Refund when your system is connected to a Xero/Quickbooks instance as the refund will not flow through and you will get an error message. 

[[insert video]]

Refund - Overview

Refunds are where you want to take money that clients have given you and pay it back to them. Normally because they have overpaid you or you have mistakenly overcharged them.

Refunds are not a trust or retainer function (there are separate processes for dealing with those). A refund is where funds have been received into your business bank account and not applied to a general retainer.


Refunds are used in two instances

  1. When a client has paid you more than you are owed, and
  2. When they have a credit note that you do not believe will be applied to an invoice

If you want to complete a refund that doesn't fit into the two options above, you will be able to process a withdrawal instead. 


Processing a Refund

To process a refund, go to the create button on the top right-hand side of Actionstep and, under the expanded version, select Client Refund.



On the 'New client refund' screen, you can enter the details of the refund. The refund creates money going out of your bank account as well as updating the unallocated client payment or credit note so there are fields for both.

To bring up the details of the item you are going to refund, you will have to search for the client to whom the unallocated client payment or credit note was made out to. If there are multiple items for a client then all will be displayed. 


The fields on the new client refund screen are explained below.

Payment from

Select the bank account that the refund will come out of. The refund will create a banking transaction that will appear in your financial reporting and your bank reconciliations.


Enter the date that the refund was processed.

Payment to

Use the 'Choose a contact' box to search for and select the client that has the item that you want to refund.

You must select a client for the refundable items to be displayed.

Payment method

The method in which you processed the refund. Depending on which method is selected, the 'Reference' field may display.


Enter the reference for the transaction. This field will only appear for some payment methods. This reference will display in the bank reconciliation to help you identify the transaction.

For example, when you enter an Electronic Funds Transfer as the payment method, you would enter the reference for that transaction that would appear on your bank statement.

Journal Memo

This is the explanation of the transaction, and why you are processing a refund. This will help you identify the cause of the transaction at a later date and in your reconciliations. 

You can use the quick code to apply a pre-saved Memo.


Each item that is available to be refunded will be displayed once you choose the client from the 'Payment to' field. 

Each item will display its type and its unique id, its date, the total amount and the unallocated amount for the item. The unallocated amount is the amount that you can refund for the item.

To the right of each item, enter the amount that you would like to refund in the applied box.

If you want to apply all the arrow icons /helpdesk/attachments/150002489339to the left of the 'Applied' box to apply a refund to all of the unallocated amounts.

Click Save once you have entered the details about the refund.


Finding and Editing Previous Client Refunds

Once created, you can find a refund by going to the 'Billing' menu at the top of Actionstep and choosing 'Payments'. Any transaction with 'Client refund' in the left-hand "Entry type" column will be a refund. You can click on the words 'Client refund' to open that transaction. 

You can open a previous refund and make changes to it. The changes will be applied once you click Save. 

There can be restrictions on when an accounting transaction can be edited such as if it is part of a saved bank reconciliation or a saved tax return.


Refund Transaction Types

There are two types of transactions that you can refund in Actionstep. We explain what each is and how they occur below. We also explain when a refund should be used versus a withdrawal.

Overpayments or Unallocated funds

When you are processing a client receipt (a payment from a client towards a bill or bills that you have issued them, there are two parts of the form where you enter the amounts).




The first is the deposited amount. This is the amount of money that will be going into your bank account. 

The second is the applied amount. The applied amount will be the total of the funds that you have applied against your bills.

In almost all situations, these will match. You cannot apply more to an invoice than what you deposit into your bank account and clients rarely overpay you. However, that can happen which is how you get a client payment with unallocated funds.



Unallocated funds happen when you deposit more than what you can apply to an invoice. When this happens, you will see a blue box on the Client payment screen that will highlight the unallocated funds.

If you have a system that allows for General Retainers, you will be able to place the unallocated funds into the retainer. Otherwise, you will have to leave them unallocated.

Unallocated funds can be applied to another invoice later as long as that invoice is created so that it is dated on or before the date of the payment with the unallocated funds.


Unapplied Credit Notes

Credit notes are created from an invoice when you want to either refund the invoice to write off part or all of the invoice. In most cases, you will create a credit note to apply it to an existing invoice reducing the amount owing to the client.

You can, however, have a credit note open for a client but have no intention of invoicing that client again so have no invoice to apply it to. In this case, you can use the Refund option to return these funds back to the client. 

An example of when to use a refund for a credit note might be when you have invoiced a client and they have paid but after that payment, dispute part of the bill. You agree to credit them for that part of the bill but do not expect to engage them for any further services so will not invoice them again. In this case, you wish to return the credited amount back to the client.


Client Refund vs a Withdrawal

If you are wanting to send funds to a client but it is not related to a credit note or an overpayment, you can create a banking withdrawal instead. Banking withdrawals are typically used for one-off payments that were made by the business that you did not get an invoice for.


Reporting on Refunds

To see a list of all refunds go to Accounting>Banking and click on the three dots to the right of the bank account where you have issued the refund. Then click on transactions. 



Then click on filter > Select Entry Type and choose Client Refunds. This will give you a list of all refunds.



Related Articles:


Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select atleast one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article