Most eBay refunds are taken from your seller balance as part of eBay Managed Payments but occasionally if your seller fund balance does not cover the cost of the refund then eBay will charge your card or bank account on file directly for the refund amount.
Does Link My Books account for these refunds?
Yes. When a refund is charged to your card or bank account on file eBay include two transactions in the payout report for the period the refund occurred in.
The first transaction is listed as an "Internal transfer refund" in the payout report. Link My Books accounts for this in the category ‘Refunded Principal’ – this may have an extension to it such as ‘Sales shipped to GB’ or ‘Sales shipped outside EU’ depending on where the item was originally shipped to.
If the refund transaction included a credit of eBay fees these are also accounted for by Link My Books.
The second transaction is listed as a "Refund Charge Credit" in the payout report. This is essentially when eBay credits that money back to your seller fund balance, Link My Books shows this transaction as ‘Refunded Other Fees’.
Importantly this refunded other fees amount will be allocated to your chosen eBay fees account and tax rate, which is "eBay Fees" and "20% VAT on Expenses" if you chose to use our default accounts and tax rates.
How do I reconcile the refund charge on my bank account or credit card?
So the refund itself is accounted for in the invoice/journal Link My Books created for the eBay payout but there are two actions to take to reconcile both the deposit from eBay covering the payout containing the refund and the charge to your bank account directly for the refund.
Firstly you will reconcile the amount received into your bank account for the full payout value against the invoice/journal entry created by Link My Books for that payout as normal.
Secondly to account for the refund charged directly to your bank account you will need to create an expense transaction and assign that to your eBay Fees account, and ensure that it has the same 20% VAT on Expenses tax rate is selected (if you use the Link My Books default accounts and tax rates). It may be useful for audit purposes, to note on the expense transaction that it is part of a payout and note the payout ID.
This will ensure everything is where it should be, all accounted for and both the payout amount and refund charge have been reconciled.