Refunding a customer payment

Sometimes you have to give money back. Customer changed their mind, job got cancelled, the work didn't go to plan. Karven handles refunds through Stripe with one click, but the bookkeeping and the conversation around it matter as much as the click.

How to issue a refund

From the quote or invoice in question:

1. Payments → [transaction] → Refund.
2. Pick Full or Partial.
3. If partial, enter the amount.
4. Optional: write a reason (the reason appears in the audit log but not on the customer's receipt).
5. Confirm.

Karven calls Stripe immediately. Customer-side, the refund hits their card within 5-10 business days depending on their issuing bank. Most banks credit within 2-3 business days.

Refund timing

• Within 24 hours of payment. The charge can usually be voided rather than refunded. Voids don't appear on the customer's statement at all, much cleaner. Karven detects this automatically and voids when it can.
• Within 90 days of payment. Standard refund via Stripe. The original charge appears on the customer's statement, then a separate refund line appears 5-10 days later.
• More than 90 days after payment. Stripe may not be able to process the refund directly. Karven prompts you to do a manual bank transfer instead, and records the manual refund against the original payment for reconciliation.

What about the Stripe fee?

When you refund via Stripe, the original processing fee is not returned to you. So if you took $5,000 and the fee was $85, refunding the full $5,000 costs you $85 net.

Two implications:

• For a cancellation refund, decide whether you're absorbing the $85 or retaining it as a "we copped fees" deduction. Either is defensible. Be explicit with the customer.
• For a partial refund (e.g. small remediation), the fee is unaffected, refunding $500 from a $5,000 payment doesn't cost you anything extra.

Karven shows you the fee situation clearly on the refund screen.

Deposit refund on cancellation

If a customer cancels before work starts, the contract typically allows you to retain a portion of the deposit for costs already incurred (admin time, materials ordered, supplier deposits). Whether you do this is a judgement call.

The Karven flow:

1. Open the quote → Cancel.
2. Karven shows the deposit amount paid and asks: retain in full / refund in full / refund partial.
3. If partial, enter the amount you're refunding. Karven processes the refund and the rest stays as a "cancellation fee".
4. Karven generates a cancellation summary PDF for the customer's records.

Be reasonable. Charging a 100% retention on a deposit when no work has started typically doesn't hold up if the customer takes it further. Most operators retain 20-30% on early cancellation and full on late cancellation (where materials have been ordered).

Chargeback vs refund

If a customer disputes a charge with their bank instead of asking you for a refund, you have a chargeback. Different process:

• Refund: initiated by you. No fee, just the lost Stripe processing.
• Chargeback: initiated by the customer's bank. Stripe charges a $15 dispute fee whether you win or lose.

If a customer is threatening a chargeback, it's almost always cheaper to refund pre-emptively and lose the relationship cleanly than to fight the chargeback and lose $15 on top.

GST on refunds

A refund reduces your taxable supply for the period. Karven recognises the reduction automatically:

• On cash basis: the refund hits G1 in the period the refund was processed.
• On accruals: the refund hits G1 in the period the original invoice was raised, via a credit adjustment.

For partial refunds, only the refunded portion is reversed.

Records to keep

Karven keeps everything automatically, but for your own files, retain:

• The customer's request for the refund (email, SMS, message thread).
• The original signed quote and any variations.
• Any photos or evidence of work completed vs cancelled.
• The Karven refund receipt.

You'll be glad of these if there's ever a follow-up dispute.

Refunding cash payments

If a customer paid you in cash and you need to refund them, that's outside Karven's payment loop. Record the refund manually under Payments → Record external refund so your books and Karven stay in sync. You give them cash; you record the transaction.

A note on refund culture

The trades are different from retail. A customer who buys a T-shirt has different return expectations than a customer who's commissioned a $30k deck.

Be clear in your terms about what's refundable and when. Karven's default terms cover this, but read them, they're your defence if a dispute escalates.

A common gotcha

Refunding before checking your accountant if it's the right move at year-end. Refunds can trigger GST adjustments that shift income across periods. If the refund is significant and it's near a BAS deadline, ring your bookkeeper first.