# Refunds and Overpayments

An overpayment is not a problem, it is a credit sitting on the customer.

It becomes a decision only when they want it back, and the rule for that is short: only unapplied money can be refunded.

![A customer payment with a Refund button in the header and the more-actions menu open beside it, listing View Journal and Delete. The allocations behind it show the payment fully applied to one invoice.](https://www.sorviai.com/help/customer-payments/customer-payment-actions-menu.png)

*Refund is a header action, not a menu item. Only an unapplied balance can be refunded.*

## What happens to an overpayment

Money received beyond what was allocated stays as an unapplied amount on the customer. It is real cash in your bank and a credit in their favour, and it will offer itself the next time you allocate anything for them.

1. **They overpay**: More arrives than was due
2. **Excess unapplied**: Sits as credit on the customer
3. **Next invoice**: Apply it, or
4. **Refund**: Give it back

> **Tip:**
>
> **Ask before refunding**
>
> A customer who overpays by a small amount usually prefers it held against their next invoice. A refund costs you a bank transfer and them a reconciliation.

## Refund it

- **Check the unapplied amount**

  On the customer overview, or on the payment itself. Only this figure is refundable.
- **Raise the refund**

  From the payment, or from the customer's unapplied balance.
- **Choose the account and date**

  The account the money leaves from, and the date it left. Both feed your reconciliation.
- **Save**

  Cash reduces, the unapplied balance clears by the refunded amount.

> **Warning:**
>
> **Allocated money is not refundable**
>
> If the payment has been allocated to invoices, that money has settled a debt. To give it back you must first unallocate it, or credit the invoice, which is a different decision with different accounting.

## Which kind of refund

| They are owed money because | Refund from | Why |
| --- | --- | --- |
| They paid too much | The unapplied payment | The money was never earned against anything. |
| You overcharged them | A credit note | Value has to be reversed on the invoice first. |
| Goods came back | A return, which produces the credit | Stock and value both need to move. |
| A deposit is no longer needed | The advance balance | It was a liability, not revenue. |

Getting this right matters more than it looks. Each route posts somewhere different, and a refund taken from the wrong place leaves either revenue or a liability misstated.