Refunds

OVERVIEW:

A refund is entered as an 'adjustment against a payment' with a negative amount.  The result is a reduction against your income (payments).  Performing a negative adjustment against a payment is described in detail in the section labeled Adjusting Payments and Advances.

Generally, a refund is made as the result of an over payment, either by your client or from their insurance company.  Before attempting a refund, you should first understand the concepts of Open-Item Accounting and Advances.

The overall idea behind advances is that they are created when you receive payments from a client or insurance company but you do not yet know which sessions they should be applied against.  For example, suppose you bill $100 for a session and the client makes a co-payment of $20 leaving a balance on that session of $80.  Later, you discover that the insurance company sent you a $90 payment for that session.  If you pay the $90 against the session it would result in a credit balance of -$10.  

Before we continue with the above example, remember the section on Open-Item Accounting suggests that you to never overpay sessions.  In the above example, you could avoid overpaying the session by either one of two different methods. 

First, you could have applied the original client payment of $20 against an advance.  Then when you received the $90 from the insurance payment, you could have applied the entire amount against the session without overpaying it.  If done this way, the session would still have a $10 balance and you could then 'borrow' $10 from the advance to pay off the session so it would end up with a $0 balance.  This is described in detail in Advances and Applying Advances.  The end result is a $10 credit residing in the Advance, which you could either refund or apply against another session.

Secondly, if you already applied the $20 co-payment against the session ($80 balance remaining), you could apply $80 (of the $90 insurance payment) toward the session and then apply the remaining $10 against the advance or another session.  This second option tends to "muddle" up sessions and a Financial History will be hard to read.  The first option is more advisable.