---
updatedAt: 2026-04-09T13:42:46.000Z
agentTools:
  projectIndex: https://docs.pelcro.com/v2.4/llms.txt
---

# Refunds Made

Money returned to customers for canceled subscriptions, dissatisfied customers, or billing errors - how refunds affect cash, revenue, and liabilities.

## What is Refunds Made?

**Refunds Made** represents money returned to customers during the reporting month. Refunds can occur for various reasons: canceled subscriptions, dissatisfied customers, billing errors, or returned products. When you issue a refund, it reverses part or all of a previous transaction.

When a refund is issued:

1. **Cash decreases** - Money leaves your bank account or payment processor
2. **Customer Balance may increase** - Credit added to customer account (for some refund types)
3. **Deferred Revenue may increase** - Service obligation removed (for undelivered services)
4. **Recognized Revenue may increase** - Previously recognized revenue reversed (for delivered services)

This row appears when **refunds are successfully processed**, not when refund requests are made.

***

## Refunds Included

A refund appears in "Refunds Made" when ALL of the following are true:

1. **Created this month**: Refund `created` date is within the selected month
2. **Successful refund**: Refund status is "succeeded" (not pending or failed)
3. **Correct account**: Refund belongs to your account
4. **Correct currency**: Refund currency matches the selected currency

***

## Real-World Examples

**Example 1 - Full Subscription Refund Before Service:**

* Customer paid $1,200 for annual subscription on October 1
* Customer cancels same day, full refund issued
* **Result in October's Report:**
  * Cash - Online Payments: -$1,200 (money returned)
  * Deferred Revenue: +$1,200 (no longer owe service)

**Example 2 - Partial Subscription Refund After 3 Months:**

* Customer paid $1,200 for 12-month subscription
* Customer cancels after 3 months, refund for remaining 9 months = $900
* **Result in Refund Month's Report:**
  * Cash - Online Payments: -$900 (money returned)
  * Deferred Revenue: +$675 (9 months of undelivered service)
  * Recognized Revenue: +$225 (3 months were already recognized)

**Example 3 - Order Refund with Credit:**

* Customer returns $50 product ordered last month
* Refund issued as store credit instead of cash
* **Result in October's Report:**
  * Customer Balance: +$50 (credit for future use)
  * Cash: $0 (no money movement)

**Example 4 - Check Refund Issued:**

* Customer paid by check, now receiving refund by check
* **Result in October's Report:**
  * Cash - Offline Payments: -$200 (check issued)
  * Deferred Revenue: +$200 (service no longer owed)

***

## Columns Affected

Refunds Made can affect multiple columns depending on refund type and context:

| Column                      | Effect    | Sign         | What It Means                          |
| --------------------------- | --------- | ------------ | -------------------------------------- |
| **Cash - Online Payments**  | Decreases | Negative (-) | Refunds to credit cards, PayPal, etc.  |
| **Cash - Offline Payments** | Decreases | Negative (-) | Refunds by check, wire, etc.           |
| **Customer Balance**        | Increases | Positive (+) | Credits issued instead of cash refunds |
| **Deferred Revenue**        | Increases | Positive (+) | Undelivered service obligation removed |
| **Recognized Revenue**      | Decreases | Positive (+) | Previously recognized revenue reversed |

***

## Cash - Online Payments / Offline Payments

### What Does This Number Mean?

**Cash** in refunds shows money physically leaving your business to return to customers.

Think of it as: **"Money going back to customers"**

### The Exact Calculation

```
For each online refund this month:
  Add: -1 × Refund amount

For each offline refund this month:
  Add: -1 × Refund amount

Result is shown as a NEGATIVE number (cash decreasing)
```

**Why Is This Number Negative?**

Cash is decreasing - money is flowing OUT of your business. This is the opposite of receiving payments (positive numbers).

**Example:**

| Date      | Customer  | Method | Amount | Running Total |
| --------- | --------- | ------ | ------ | ------------- |
| Oct 5     | Refund #1 | Visa   | -$110  | -$110         |
| Oct 12    | Refund #2 | Check  | -$500  | -$610         |
| Oct 20    | Refund #3 | PayPal | -$250  | -$860         |
| **Total** |           |        |        | **-$860**     |

***

## Customer Balance

### What Does This Number Mean?

**Customer Balance** in refunds shows credits issued to customers instead of cash returns, or for certain types of refunds that create customer credits.

Think of it as: **"Store credit instead of cash back"**

### When Does This Increase?

1. **Non-online refunds**: Offline refund methods
2. **Credit note refunds**: Refunds issued with credit notes
3. **Order refunds**: eCommerce order returns
4. **Store credit policy**: When you offer credit instead of cash

### The Exact Calculation

```
For each refund this month:
  IF refund is not online
     OR has credit note
     OR is for an order:
    Add: Refund amount to Customer Balance
  ELSE:
    Add: $0

Result is shown as a POSITIVE number (credit increasing)
```

**Example:**

* Order refund: $50 → Customer Balance: +$50 (store credit issued)
* Offline refund with credit note: $100 → Customer Balance: +$100
* Regular online subscription refund: $200 → Customer Balance: $0

***

## Deferred Revenue

### What Does This Number Mean?

**Deferred Revenue** in refunds shows the portion of the refund that represents undelivered services being canceled.

Think of it as: **"Service we no longer owe"**

### The Exact Calculation

For subscription refunds, the system calculates how much service was already delivered vs. undelivered:

```
For subscription refunds:
  Calculate: Percent of subscription period NOT yet delivered
  Multiply: Refund amount × (1 - consumed percentage)

Result is shown as a POSITIVE number (liability decreasing)
```

**Example - Annual Subscription Refund After 3 Months:**

* Original payment: $1,200 for 12 months
* Service delivered: 3 months = 25%
* Service undelivered: 9 months = 75%
* Refund issued: $900
* Deferred Revenue: +$675 (75% of $900 = undelivered portion)

### Why Is This Number Positive?

When you refund undelivered service, your liability (what you owe the customer) decreases. Decreasing a liability is shown as a positive number.

***

## Recognized Revenue

### What Does This Number Mean?

**Recognized Revenue** in refunds shows the portion of the refund that represents services already delivered and previously recognized as income.

Think of it as: **"Income we need to reverse"**

### The Exact Calculation

```
For subscription refunds:
  Calculate: Percent of subscription period already delivered
  Multiply: Refund amount × consumed percentage

Result is shown as a POSITIVE number (reversing negative income)
```

**Example - Annual Subscription Refund After 3 Months:**

* Original payment: $1,200 for 12 months
* Service delivered: 3 months = 25%
* Refund issued: $900
* Recognized Revenue: +$225 (25% of $900 = delivered portion being reversed)

### Why Is This Number Positive?

Recognized Revenue is normally negative (income). When you reverse it due to a refund, it becomes less negative (moves toward zero), shown as a positive number in this row.

***

## How Subscription Refunds Are Calculated

### Time-Based Subscriptions

The system calculates what percentage of the subscription period was consumed:

```
Consumed Percentage = (Seconds Elapsed / Total Period Seconds)
```

**Example:**

* 12-month subscription = 365 days = 31,536,000 seconds
* Customer cancels after 90 days = 7,776,000 seconds
* Consumed: 7,776,000 / 31,536,000 = 24.66%
* Undelivered: 75.34%

**Refund Split:**

* Deferred Revenue: 75.34% of refund (undelivered)
* Recognized Revenue: 24.66% of refund (delivered)

### Shipment-Based Subscriptions

For subscriptions based on issues/shipments:

```
Consumed Percentage = (Shipments Delivered / Total Shipments)
```

**Example:**

* 12-issue subscription
* 3 issues delivered
* Consumed: 3 / 12 = 25%
* Undelivered: 75%

**Refund Split:**

* Deferred Revenue: 75% of refund (9 issues not delivered)
* Recognized Revenue: 25% of refund (3 issues already delivered)

***

## Special Cases

### Immediate Refunds (No Service Delivered)

If a customer is refunded immediately after payment (same day, before any service):

* Deferred Revenue: +100% of refund
* Recognized Revenue: $0 (nothing was recognized yet)

### Full Period Completed Refunds

If a subscription completed its full term and is then refunded:

* Deferred Revenue: $0 (everything was delivered)
* Recognized Revenue: +100% of refund (all was recognized, now reversing)

### Order Refunds

eCommerce order refunds typically go to Customer Balance:

* Cash: May or may not decrease (depends on refund method)
* Customer Balance: Increases (store credit issued)

***

## Common Questions

### Why are some refunds split between Deferred and Recognized Revenue?

**A:** For subscriptions, we calculate what portion of the service was already delivered:

* **Delivered portion**: Recognized Revenue (reversing income already earned)
* **Undelivered portion**: Deferred Revenue (canceling obligation)

This ensures accurate revenue recognition.

### What if I refund more than the original payment?

**A:** The system records the actual refund amount. If you refund $150 for a $100 subscription, the full $150 appears in this row, split proportionally.

### Do tax refunds appear here?

**A:** Refunds in this row include the full amount refunded (including any tax portion). The system doesn't separately break out tax from refunds.

### What's the difference between a refund and a credit note?

* **Refund**: Money actually returned to customer (appears in this row)
* **Credit Note**: Adjustment to an invoice, may or may not involve a refund (appears in "Credit Notes" row)

Refunds can be associated with credit notes (tracked in the data).

### When does a refund appear in this row?

**A:** Refunds appear when they're **processed/created**, not when requested. If a customer requests a refund October 30 but you process it November 2, it appears in November's report.

### Can I see which customers received refunds?

**A:** Yes! If you have the appropriate permissions, there's a download icon next to the Refunds Made row that lets you export detailed transaction data.

### What happens if a refund fails?

**A:** Failed refunds don't appear in this row. Only successful (status = "succeeded") refunds are included.

### How do partial refunds work?

**A:** Partial refunds follow the same logic - the system calculates the consumed percentage and splits the partial refund amount accordingly between Deferred and Recognized Revenue.

### What if a subscription ended before the refund?

**A:** If the subscription already ended, the system uses the actual end date to calculate the consumed percentage, ensuring the split accurately reflects what was delivered.

***

## Summary

**Quick Reference:**

**What appears here:** Successful refunds processed during the month

**Inclusion criteria:**

* Refund created/processed this month
* Status = succeeded
* Correct account and currency

**Columns:**

* Cash: Negative (money returned to customers)
* Customer Balance: Credits issued
* Deferred Revenue: Undelivered service refunded
* Recognized Revenue: Delivered service refunded (revenue reversal)

**Subscription refund formula:**

* Deferred: Refund × (1 - Consumed %)
* Recognized: Refund × Consumed %

# Sibling pages

* [Payments Received](https://docs.pelcro.com/v2.4/docs/accounting-cash-movement-payments-received.md)