Introducing the Refund Process

Purpose: You can use the system's refund functions to review and manage:

• refunds you owe your customers

• balances your customers owe you.

With this option, you can issue refund checks and credits or write refunds off. You can also void and reconcile refund checks, review refund check detail, and purge refund check records.

Working with the Refund Process

The system creates a refund any time there is a difference between the order total and the payment.

Refunds occur when:

• The customer returns an item.

• You cancel all or part of a prepaid order at the customer's request.

• You cancel all or part of a prepaid order because the merchandise is soldout.

• The system cancels all or part of a prepaid order through the Automatic Backorder Cancellation program.

• You cancel part of an order when the customer has already paid the entire freight amount.

• The customer's initial payment exceeds the total cost of the order (overpayment).

• The customer pays less than the order total (underpayment).

Important: The system will never generate a refund for an order if you cancel an item on the order with a cancel reason whose Generate refund? field is set to 3 (do not generate a refund).

Refund types: There are several types of refunds:

• Checks = A refund check can be cut for the exact amount of the refund.

• Credit card credits = In addition to crediting the customer's credit card account, you can issue a credit card credit acknowledgment. See Processing Refunds (MREF).

• Stored value card credits = The system generates a new stored value card for the refund amount; the customer can use this stored value card credit towards a new order; see Generating Stored Value Card Refunds for more information on when the system creates a stored value card credit.

The system generates a refund type that corresponds to the way the customer paid for the merchandise. For example, if the customer paid using a Visa card, the system generates a credit card credit. However, you can control how the money is refunded by defining an alternative refund type in the Pay Type table. You can also change the refund type by defining an alternate refund category. See How Pay Type Determines Refund Type.

Functions that produce refunds: Refunds are created from:

• Order Entry (or Order Async): overpayment due to a soldout item or an initial amount more than what is owed (overpayment) or less than what is owed (underpayment)

• Order Maintenance (Returns or Billing cancellations)

• Return Authorization Process (Credit returns)

• Billing (Automatic Backorder Cancellation)

• Auto Soldouts (Auto Soldouts program)

Important: The system will never generate a refund for an order if you cancel an item on the order with a cancel reason whose Generate refund? field is set to 3.

Refund reason codes: The system assigns each refund a reason code. These codes are:

Code	Description
A	Auto cancel backorders This reason applies when a backorder item exists on an order and you process automatic backorder cancellations.
B	Balance due This reason applies when an order has an unpaid balance.
O	Overpayment This reason applies when a customer pays more than the order total, when the customer cancels a prepaid item or order, or when an item on a prepaid order is sold out.
R	Return This reason applies when a customer returns one or more items using a return authorization.
S	Soldout This reason applies when a soldout item exists on an order and you process automatic soldout cancellations.

Why do refunds go on hold? The system can hold a refund automatically or you can place them on hold.

Automatic holds occur when:

• the refund check amount is less than the minimum or more than the maximum amount specified in the Pay Type table; see Working with Pay Types (WPAY).

• the refund release days have not elapsed (this is used to hold refunds for an order paid by check until the check has cleared)

• the order that includes the refund is on hold

• the cancel reason you used to cancel any item on the order had the Generate refund? field set to 2

• the refund is associated with Credit Card Net Exchange Billing

You can also place a refund on hold manually through Working with Refunds, Writeoffs and Balances Due (WREF) (for example, if you suspect a fraudulent customer).

Can I release held refunds? You can release refunds that are on hold. Releasing refunds from hold, however, does not mean that they will be processed if the order is on hold.

The system releases the refund automatically when the order hold is released or the refund release days pass. However, if the refund is on hold because it is more than the maximum for the pay type or because you put it on hold manually, you must release it through Working with Refunds, Writeoffs and Balances Due (WREF).

Writeoffs: When the amount of a refund is less than the minimum defined for the pay type, the system marks the refund to be written off. The refund will be written off the next time you process refunds unless you change the status (for example, to generate a refund check because the customer requests it).

You can also change the status of a refund to “writeoff pending” through Working with Refunds, Writeoffs and Balances Due (WREF) regardless of the refund amount (for example, if you have tried and failed to collect a balance due).

What happens to writeoff amounts? When you write off a refund amount the system updates the customer record with the writeoff amount. The writeoff balance accumulates for the customer. You can apply the balance to a new order as a payment if it is a positive amount or as an additional charge if it is a negative amount.

Can I cancel a refund? You can cancel a refund through Working with Refunds, Writeoffs and Balances Due (WREF) if the refund was created by mistake or the customer is a fraud.

Guidelines for issuing refunds: Follow the guidelines below when you are working with Refunds.

1. Print the Refund Due List

2. Review the refunds that are ready for processing.

3. Check the order status and determine which held orders you want to release.

4. Determine which refunds you want to release from hold.

5. Use the Work with Refunds Screen to research refunds, to release, hold, cancel or writeoff a refund, or to change the type of refund to issue.

6. Reprint the Refund Due List so that you have a record of the changes you make to the refunds and to verify that you changed the refunds correctly.

7. Process refunds and writeoffs. See Processing Refunds (MREF).

8. Reconcile checks you receive from the bank or void them as needed, and purge refund checks once reconciliation is complete. See Reconciling Checks (MREC).

What if I have a printing problem? If you have a problem printing the refund checks, you can reprint them with the Reprint Refunds Screen (MREP).

Why is each refund associated with a bank? Whenever the system creates a refund record, it associates the refund with a bank code. The system determines the bank code as follows:

• When you created the source code used on the order header, you specified a division.

• When you created the division associated with the source code, you specified a bank. The system uses this bank code.

The system uses the bank code in one or more ways, depending on whether you process orders in multiple currencies (determined by the Multi Currency by Offer (E03) system control value).

For all orders: Even if you process orders in only one currency, you might use more than one bank for deposits and refunds. When you process refund checks, the system determines the next sequential check number to use by checking the Bank table.

For orders in foreign currency: If you process an order in a foreign currency, you generate the refund in this currency as well. The system requires additional setup and validation when the Multi Currency by Offer (E03) system control value is selected; among other things, each currency is associated in Order Management System with a unique bank. The bank code that appears on the Work with Refunds Screen indicates the currency that the customer used to pay for the order. Because the system requires a bank code when you process refunds, you can generate refunds in only one currency at a time. If you specify a dollar limit to generate for one of your refund types, the system interprets this limit in your local currency, but generates the refund in the customer's currency.

Suppressing refunds: You can suppress refund processing:

• For orders you receive through the Generic Order Interface (Order API). See Suppressing Deposits and Refunds for an overview.

• For returns you receive through the Inbound Return API. See Suppressing Refunds for an overview.

In this situation, the refund is generated in a cancel pending status.