Most book entries in Springly are straightforward: expenditures, revenues, cash deposits, internal transfers between your accounts, and so on.
But unexpected situations happen. Say one of your members no longer wants to attend an event they've already paid for. You can either issue a refund or give them a credit note they can apply toward a future purchase with your nonprofit. Here's how:
- Definition of "credit note" and "refund"
- How do I record a refund in the books?
- How do I record a credit note in the books?
Edge cases are not covered in this article. For more information, see our dedicated article: Recording a credit note or refund: edge cases
Definition of "credit note" and "refund"
What is a credit note?
A credit note is a transaction used to correct or cancel an invoice that has already been issued.
This is required to comply with accounting obligations. In bookkeeping, deleting or altering documents is not allowed. If there's an error, you cannot simply edit the original invoice — you must cancel it with a credit note.
Note: you can find more information about issuing invoices in Springly here.
Credit notes apply in a variety of situations.
Examples:
- Invoice error: you sent an invoice with a mistake to one of your members. You must issue a credit note to record the correct amount or the right information.
- Example: you invoiced $550 for goods instead of $500. The credit note will reflect the $50 overcharge.
- Goodwill discount: you may want to offer a discount to a member or customer — to reward loyalty or make up for a mistake on your end. If the invoice was already sent without the discount, you'll need to issue a credit note so the discount is properly recorded in your books.
Recording a credit note requires following specific rules. If you're unsure, consult a CPA or accountant for guidance.
What is a refund?
A refund works similarly to a credit note, except that you also need to record the outgoing payment — whether the refund is full or partial.
Example: a member purchased a ticket to your event through your ticketing system, but can no longer attend due to an urgent situation and asks for a refund. You agree.
This transaction must be recorded in your books.
How do I record a refund in Springly?
Here's an example: Xavier joined your nonprofit but has decided to cancel his membership. He already paid the full $50 membership fee and is requesting a refund. You've already manually recorded his membership in the books. What do you do?
To refund this $50 membership that was previously recorded in the books:
- Go to Accounting > Book entry;
- In the dropdown menu at the bottom of the page, select "Record a refund/credit note";
This takes you to the expenditure entry page. You can also access it directly from Accounting > Book entry > Record a new expenditure.
- Click the dropdown in the Account field and select Refund/Credit note;
- A new field appears below, letting you select the account associated with your credit note or refund.
For consistency in your books, it's important to use the same account that was used when recording the original revenue — typically a class 2 or class 7 account.
Since this is a refund, you'll need to fill in the payment details:
- the refund amount;
- the payment method used;
- the bank account or petty cash.
Once you've filled in all the details, click Save. Springly will generate a refund entry in your books.
How do I record a credit note (without a refund) in Springly?
Here's another example: Charlie paid a $20 registration fee for an event hosted by your nonprofit.
A few days before the event, Charlie lets you know he won't be able to make it. He doesn't want a refund, but would like to apply the amount toward a future purchase.
You'll need to record a credit note to cancel the revenue entry. The process is the same as before, except that no payment is recorded.
The steps are the same as before:
- Go to Accounting > Book entry;
- In the dropdown menu at the bottom of the page, select "Record a refund/credit note":
This takes you to the expenditure entry page. You can also access it directly from Accounting > Book entry > Record a new expenditure.
- Click the dropdown in the Account field and select Refund/Credit note;
- Fill in the fields at the top of the page, but leave the Payment Method blank;
- Check the Deferred Payment option to remove the payment field, then save.
If the Deferred Payment option doesn't appear in your interface, you've likely disabled accrual accounting. To enable it, go to Settings > Accounting. See the dedicated article.
The entry will be added to the list of payables and receivables under Accounting > Book entry > Track payables and receivables.
If needed, you can match it with another entry to apply it as a deduction against a future transaction for Charlie.
Some edge cases apply when recording refunds or credit notes. See our dedicated article: Recording a credit note or refund: edge cases
Learn more:
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