There will be times when you will need to refund money on an account. Most times, the refund itself will not be performed within Cloud 9 itself. So, what is the best way to notate it on the ledger? What are the different scenarios when it will be necessary to show a refund? Is there a time when the refund itself can be performed from within Cloud 9?
This article will cover refunding a single payment, posting a refund when the ledger has a credit balance, posting a refund adjustment when the contract is already paid off and the process for posting a refund when there is still money left on the contract.
Before you begin, you'll want to make sure that you're familiar with accounting and posting in Cloud 9. Please see this article: Writing off a Due Now Balance.
Refunding a Single Payment
Let's start with refunding a single payment. There are three types of single payments for which you may need to refund or post a refund adjustment in Cloud 9. You might need to refund a payment that was processed outside of Cloud 9 (i.e., a check or cash payment). Alternatively, you might want to refund a payment that was processed from within Cloud 9 via credit card. How you would do this depends on when the payment was processed. There are two scenarios for this: a credit card payment that was posted today/recently within Cloud 9 and a credit card payment that was posted on a past date/over a week ago within Cloud 9. Below we will review each example.
Payment processed outside of Cloud 9:
For these payments, you will be refunding the money outside of Cloud 9, so within Cloud 9, you only need to post a 'reversal' on the ledger. This can be accomplished by clicking on the hamburger menu to the left of the payment on the ledger and choosing 'Reverse'. Next, enter your comment and then click the blue 'Reverse' button to finalize the reversal.
This will reverse that payment and put the money back onto the ledger. This only removes from the ledger and does not issue any refund. The reversal appears as its own blue line item on the ledger, as shown in the screenshot below.
Credit card processed within Cloud 9:
For credit card payments in Cloud 9, the refund method is based on the payment date. If posted the same day or within a few days, use the 'void/return' option. This will void the payment at the processor, refunding the money to the card and removing it from the ledger, appearing as 'void return' in the transaction line item. If funds haven't settled, you can successfully 'void/return' the payment. If they have settled, it will only remove the entry from the ledger and display a red error message, instructing you to refund manually via your payment processor portal.
To' void/return' a recent payment, click the hamburger menu on the left side of the line item and select 'Void/Return', then follow the prompts.
If the payment was posted on a previous date, approximately five to seven days prior, there is a good chance the funds have settled. You can attempt to 'Void/Return' the payment, but if it comes up with a red error it will only remove the amount from the ledger and instruct you to manually refund from your payment processor portal. If it has been more then five to seven days since the payment posted, a good rule of thumb is to manually refund the payment through your payment processor portal and then post a 'reversal' in Cloud 9 to remove the payment from the ledger.
Posting Refund Adjustments
You may find several types of situations that require a refund adjustment to be posted to the ledger in Cloud 9. You may have a patient/responsible party or insurance company who has overpaid and left a credit balance on the ledger to refund. There also might be an instance where the patient's account is already paid off and at a zero balance and you need to refund all or a portion of what they paid. Similarly, there may be a scenario where the patients account is not yet paid off and you need to zero it out and issue a refund. We will review these different circumstances and advise best practices to correctly post your refund adjustment.
Overpayment:
If you have a ledger that has more money paid on it then was originally allocated to the ledger and you need to refund that overpayment, you will have a credit balance on the account. This is the easiest and most ideal scenario for posting a refund adjustment. (Note: There should always be a credit balance on the account before applying a refund adjustment. The refund adjustment will always be positive similar to how payments or credits always reflect as a negative balance in Cloud 9.) To apply your refund adjustment when you already have a credit balance click the 'adjustment' icon in the upper right of the ledger screen. After clicking the 'adjustment' icon you will be in the adjustment screen. Next choose 'Refund' as the adjustment type in the drop down. You will put the positive refund amount in the 'Due Now Adjustment' box and enter your note. Once you save, your refund adjustment is complete and accurate. In the example below, we are applying a $200.00 refund adjustment.
Refunding a paid off account:
If you have a situation where you have an account that has already been paid off and the ledger is showing a $0 balance, the refund adjustment process has a few more steps. Let's say that a patient paid in full when starting treatment for $3000.00 but decided not to start after all. They will not have a credit balance as in the example above, so you can't just post the refund adjustment. You must first write off the money that was put on the books for this contract to create a credit balance to refund. In this scenario, you will click the 'balance adjustment' icon in the upper right of the ledger and choose 'write off' as the adjustment type in the drop down. Next, in the 'due now' box, you will need to put the total amount you are writing off, (and refunding) as a negative number. The below example is a write off to create a credit balance of the $3,000.00 you need to refund.
Next you would post a refund adjustment just like in the previous overpayment example. Here's a screenshot of that adjustment:
That will zero the account out again, but you will have written the contract off of the books and notated on the ledger that you refunded the patient. For more examples of how to write off contracts see this article: Write Off a Contract.
Refunding an account that still has a balance
Let's say that you have an account that had the same $3000.00 contract, but the patient has been paying on it for a year. But they are moving and will be transferring out and need a partial refund. They have paid $1500.00 and they have a $1500.00 balance in the Future Due. You are going to be refunding $500.00 of their down payment and also writing off the $1500.00 Future Due balance. First though, you must move the Future Due balance to the Due Now so it reflects the Write Off. For more information on this, see this article about moving Future Due and Due Now Balance.
For this example, the first balance adjustment to move the balance from the Future Due to the Due Now will look like this:
Next, you will be posting a 'Write Off' adjustment for the $1500.00 remaining balance plus the $500.00 you wish to refund as a negative. Here is how that adjustment will look:
This can confusing sometimes because you are writing off more than the balance that is remaining. Remember though, that the $1500 is still remaining on the books and the $500 refund was already put on the books as collected, so you do need to write off $2000 to correctly reflect the write off and refund and return the ledger to a zero balance. Now that you have a $500 credit balance you will post the positive refund adjustment just like the other two scenarios. Here's how that will look:
There may be some other slight variances in scenarios for refund adjustments but the key takeaway is that you want to have a credit balance in the due now, (usually accomplished with a Write off first if there is not one there already), to post a refund adjustment. Also, the refund adjustment will always be positive and the end goal is to bring the ledger balance back to zero.
As always, if you have any further questions please do not hesitate to reach out to Cloud 9 Support by emailing us at cloud9support@planetdds.com, or chatting us online using the chat bubble on the lower right at https://cloud9support.planetdds.com/hc/en-us, or giving us a call during our business hours of 8:00 AM EST to 8:00 PM EST at the 1.800.394.6050 option 2.