Sage, Paypal & Refunds!

[AdamSky]

I have a very small business and I very recently switched over to Sage for accounting purposes (I was doing everything manually with spreadsheets etc before hand) and I am feeling a bit overwhelmed with all the terminology etc.

I think it will be a good idea to give you an explanation of how I currently process orders paid via Paypal through Sage.

1. Customer places order and pays via Paypal.

2. Order is downloaded via trade-box and posted to Sage (product invoice).

3. Invoice is then posted to the ledger within Sage.

4. This automatically deposits the sales receipt in to a notional Paypal bank account.

5. I do a bank payment from the notional Paypal bank account to a Paypal fees nominal code (7909) for the value of the fees paid to Paypal for that particular order and use tax code T9 for this bank payment.

6. I then do a bank transfer from the Paypal notional bank account to my main business bank account for the value of the order less the fees.

7. This allows me to reconcile the incoming funds on the bank feed (Paypal withdrawal) to the bank transfer.

Here is where I am stuck. I need to process some refunds for customers that paid via Paypal. The above process has been performed for each order that now needs to be refunded.

Also a point to mention is that Paypal keep 20p of the Paypal fees after refunding as an administration charge.

How do I go about refunding these customers? Any help will be highly appreciated as I am very much out of my depth.

Regards

Adam

 

[andygambles]

In your scenario you would process the refund which would be a withdrawal from the PayPal account for the full amount.

You would then deposit back into the PayPal account the fees using the PayPal fees code.

What we do is we reconcile all fees in bulk. So at the end of a month we reconcile the PayPal accounts and deduct the fees for the month (obtained via the Financial Summary Report). This then includes fees returned for refunds.

 

[johndon68]

One of the reasons that Tradebox does not (at the moment) handle refunds is that there are so many different things that you may way to do...

First question, are you getting the items that you sold back from the customers and do you want them to go back in to stock in Sage?

John

 

[AdamSky]

One of the reasons that Tradebox does not (at the moment) handle refunds is that there are so many different things that you may way to do...

First question, are you getting the items that you sold back from the customers and do you want them to go back in to stock in Sage?

John

Hi John. Yes the customers have already or will be returning the items, they will need to go back in to stock in Sage.

 

[johndon68]

In which case you need to do the following:

1. Raise a product credit note.
2. Update the credit note to the ledgers.

This will put the item back in to stock and will show that you owe the customer the money.

The use the Customer Refund option to make the refund from the PayPal bank account.

This just leaves the fee that PayPal charge and that would be dealt with the same way as any other PayPal fee.

Take a backup before you process the refund just in case...

John

 

[AdamSky]

In which case you need to do the following:

1. Raise a product credit note.
2. Update the credit note to the ledgers.

This will put the item back in to stock and will show that you owe the customer the money.

The use the Customer Refund option to make the refund from the PayPal bank account.

This just leaves the fee that PayPal charge and that would be dealt with the same way as any other PayPal fee.

Take a backup before you process the refund just in case...

John

Thank you very much for your response

Please forgive my ignorance but I have a question.

What about the Paypal fees which were paid to the Paypal fees nominal code (7909) during the initial processing of the order? Do the fees associated with the order being refunded (less 20p) also need to be removed from that nominal code somehow?

 

[johndon68]

Do PayPal refund those fees relating to the original order?

John

 

[AdamSky]

Do PayPal refund those fees relating to the original order?

John

When I issue a refund via the Paypal website, Paypal refund the fees which were paid to them to the customer less 20p (admin charge), I refund the remainder to make up the total balance paid, which is the transaction value less fees + 20p.

 

[johndon68]

If PayPal refund the fees then enter them as a bank payment to the same nominal code that you originally posted the fees to.

John

 

[DontAsk]

When I issue a refund via the Paypal website, Paypal refund the fees which were paid to them to the customer less 20p (admin charge), I refund the remainder to make up the total balance paid, which is the transaction value less fees + 20p.

That's odd. When I make a refund from a PayPal business account, the purchaser gets the full purchase amount refunded (the purchaser doesn't pay, nor do they have visibility of, any fees). The 20p is deducted from the refund of fees. I.e. the fees that the seller pays PayPal are returned to the seller, less 20p.