---
# System prepended metadata

title: Refund Procedures

---

# Refund Procedures

:::info
:link: Cite this document via t1.gl/3Accounting-Refund
↖️ This document is a part of t1.gl/3Accounting.
:calendar: This is **v2.2** updated on 2025-07-29 by Jennifer.
Please consider this version to be **RELEASE CANDIDATE** that pending approval.
:::

[TOC]


## Overview

The following procedures should be followed whenever a candidate accepts an offer but doesn't show up, or shows up but doesn't pass the guarantee period. 

Refer to the [Revenue / Refund Recognition Principles](https://t1.gl/3Accounting-RevRec) for details regarding the Refund Recognition Policy and the kinds of refunds that are available.

#### CHANGELOG

| v | Date | Who? | What? |
| -- | -- | -- | -- |
| v2.0 | 2021-11-08 | Jennifer | Restructured document
| v2.1 | 2022-01-21 | Jennifer | Added refund procedures Step 2c & 2d. |
| v2.2 | 2025-07-29 | Jennifer | Updated refund procedures (contra apply to "Earning Month") |


## Step 1. Placement Retraction / AM Confirmation
As soon as the AM changes the status of the submission from `Hire`/`Hire started` to `Rejected`, an automatic email titled `[t1.me] Offer Rejected: {{Candidate}} → {{Client}}` will be triggered, the AM should verify and reply to the thread with the necessary information.

Jennifer should review the refund policy on the signed terms of business, and then move on to step 2.

## Step 2. Refund Recognition

The steps below will differ depending on whether an invoice has already been issued for this placement.

Step 2a: Invoice has **not** yet been issued
Step 2b: Invoice has been issued
Step 2c: Invoice issued and paid


### Step 2a. Invoice NOT issued -> Refund SR

Refer to t1.gl/3accounting-placements for instructions on how to refund a sales receipt, then continue to step 3.

### Step 2b. Invoice ALREADY issued -> Refund with Credit Note

1. In QBO, click on the `+ New` button and choose `Credit Memo`.
2. Use the number of the associated invoice and add the prefix ` CR` as the Credit Note # (make sure to include a space so it is searchable), for example, `MG01 CR`, `PK11 CR`. (Refer to the t1.gl/3Accounting-Invoice Numbering Scheme.)
3. Select the appropriate `Product/Service` for this refund.
4. Fill in the following and paste to the `Description`:
    ```
    Name: {candidate_name}
    Offer Acceptance Date: {YYYY-MM-DD}
    Start Date: {YYYY-MM-DD}
    Fee: {currency}{amount}
    {reason_for_the_refund}
    ```
5. According to the splits (if any), pick the appropriate consultant from the options under `Class`. (This will reverse the amount billed by the consultant.)
7. Click 'Print or Preview' to export the Credit Note to PDF.
8. Return to QBO homepage and click on the `+ New` button and choose `Receive Payment`.
9. Select the appropriate client under the `Customer` dropdown.
10. Select the open invoice you want the credit note applied to from the `Outstanding Transactions` section, then choose the credit notes to apply under the `Credits` section.
11. Under the `Payment` column, enter the amount of credit you wish to apply. The `Payment method`, `Reference no`, `Deposit to`, and `Amount received` fields should be left blank.
12. After applying the credit note, enter the relevant payment date and verify the total is correct.
6. Clcik `Save and close` when done.
7. Create a row in the @invoice table, with the txType set to 'Credit note' and the revType as 'Contra Revenue'. The row should be associated with same the submission as the original invoice.
8. Enter 'Written off by [SR_NUM]' under the AccountingNotes field of the original invoice, and add the collected date as the credit note date. Enter 0 as the collected amount.

### Step 2c. Invoices that have already been paid -> Refund with Credit Note

If an invoice has already been paid and a refund is required (e.g. due to candidates dropping out or failing during the guarantee period), a Credit Note will be prepared immediately on date of withdrawal. Please refer to Step 2b on how to preparing a Credit Note.

The [AM must record the drop out correctly](https://hackmd.io/@terminal1/am/%2FzUPQVFLRQCOUChKgq52RUw#Candidate-leaves-within-guarantee-period).

| # | TOB | Accounting Procedures |
| - | - | - |
| 1 | 100% refund w/ possible replacement | 1. (Date of withdrawal) Credit note for 100%<br>2a. If replacement ✔️, recognize full revenue to new CM.<br>2b. If replacement ❌, send cash back to client (date depending on TOB) to clear the CN.
| 2 | 50% refund w/ possible replacement | 1. (Date of withdrawal) Credit note for 50%<br>2a. If replacement ✔️, recognize 50% revenue to new CM. Apply CN to reduce amount payable to 0.<br>2b. If replacement ❌, send cash back to client (date depending on TOB) to clear the CN.
| 3 | 100% refund w/o replacement | 1. (Date of withdrawal) Credit note for 100%. Send cash back to client (date depending on TOB) to clear the CN.<br>2. Any future placement gets 100% rev rec.
| 4 | 50% refund w/o replacement | 1. (Date of withdrawal) Credit note for 50%. Send cash back to client (date depending on TOB) to clear the CN.<br>2. Any future placement gets 100% rev rec.

Notes:
- "Earning Month" refers to the specific month within the Earning Quarter when the original placement revenue was recognized.
- Pro-rata (or any other <100%) cases are treated in the same spirit as 50% cases.
- Previous CM gets revenue reduced immediately using the Credit Note on date of withdrawal. It will be less than 100% in cases where we issue a refund/credit note of less than 100% to the client. 

Example for Case 2 (50% refund w/ possible replacement):
- **1 Jan:** Invoice Client for CDD A at $100. Recruiter A gets billings of $100.
- **1 Feb:** CDD A backs out. We immediately issue CN for $50 applied to the "Earning Month" (Jan). Recruiter A billings go down by $50. We immediately start searching for a replacement.
- **1 Mar:** Recruiter B makes a replacement placement with Client for CDD B. There is no difference to bill. We issue an invoice to make Recruiter B's billings go up by $50 and apply the $50 CN so that no money is due from the client.

Example for Case 4 (50% refund w/o replacement):
- **1 Jan:** Invoice Client for CDD A at $100. Recruiter A gets billings of $100.
- **1 Feb:** CDD A backs out. We immediately issue CN for $50 applied to the "Earning Month" (Jan). Recruiter A billings go down by $50. The terms say we don't need to refund cash, so we don't do anything else.
- **1 Mar:** Recruiter B makes new placement with Client for CDD B at $500. Recruiter B billings go up by $500. We create an invoice for $500, apply the $50 CN to the invoice, and ask the client to send us $450 in cash. 

## Step 3. Reversal of Provisions

1. Make adjustments to the journal entry for the guarantee provisions previously created for this placement (during revenue recognition process).

==TO BE DISCUSSED==
How to adjust?
Just change the number or another journal?


## Step 4. Refund Confirmation

1. Attach the PDF file of the refund receipt or the credit note to the same email thread that initiated the refund.
2. Respond using the following template, and include the QBO links, adjusting the content as needed based on the actual situation.

<iframe src="https://t1te.netlify.app/3Accounting-Placements-Offer-Withdrawal_Checklist.txt" width="100%" height="400px"></iframe>
