Begin with a settlement report
Retain the processor’s settlement identifier, sales report and adjustment details. Match each customer refund to its original transaction, including the sales channel and original tax information. A store refund of an online purchase needs a single coordinated record so two systems do not reverse the same sale.
Keep fees, customer disputes and processor reserves distinct. A reserve held by the processor is different from a confirmed processing expense. The status and recoverability of held amounts should be reviewed using the agreement and available evidence.
Worked example: a settlement with a reserve release
A hypothetical Saskatoon retailer’s statement shows $13,200 of gross customer charges, $880 of refunds, $330 of fees and $220 newly held in reserve. These produce $11,770 before other movements. A $110 release from an older reserve brings the bank deposit to $11,880.
The new $220 hold less the $110 release increases the processor-held balance by $110. That movement is not additional sales or an automatic expense. The figures above are statement cash amounts; the sales and refund records must still identify their tax components correctly.
Follow the refund through inventory and taxes
Confirm whether returned goods went back into saleable stock, were damaged or never arrived. Use the actual outcome rather than assuming every financial refund restores inventory. Customer concessions without a physical return also need a clear reason in the transaction record.
For tax reporting, retain the original supply details and credit documentation. Interprovincial sales can require different GST/HST treatment, and Saskatchewan PST has its own rules. Do not apply a local tax percentage to every online refund merely because the shop is in Saskatoon.
Resolve differences while the evidence is available
At month end, reconcile processor balances and deposits still in transit to the statements. Assign unresolved disputes to someone who can provide delivery or customer-service evidence within the processor’s process. The bookkeeper should not write off a difference simply to force the bank match.
Review recurring refunds by product and channel alongside stock losses and delivery costs. This can identify an operational problem that the net bank deposit never reveals. A clear settlement trail supports both accurate books and more useful purchasing decisions for the next sales period.
Put this into practice
Sources and current guidance
A practical next step
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