Issuing a Credit Memo

Before a credit memo can be printed, it must first be generated for an invoiced order. You can issue both online and offline refunds from an open credit memo, depending on the payment method.

• Refunds can be applied to store credit.
• Refunds can be applied to company credit.
• Purchases made by credit card can be refunded either online or offline.
• Purchases made by check or money order must be refunded offline.

Payment action configuration

Any credit memo with a status of Open has an outstanding refund due. The refund workflow for orders paid by credit card is determined by the Payment Action setting in the configuration of the payment method. Refunds cannot be issued until the transaction is settled.

• If Payment Action is set to Authorize, you must first generate the invoice from the Magento Admin before a credit memo can be created.
• If Payment Action is set to Authorize and Capture, the invoice has already been generated by the payment processor, but the funds are not available until the transaction is settled. This brief waiting period is recommended by many payment processors as a security measure and can usually be handled automatically. Transactions can also be settled manually from your merchant account with the payment processor.

Payment Action setting for Braintree

If you are using Vertex Cloud, see the Vertex Settings configuration section for information about issuing refunds for sales orders that are invoiced when the status is either Suspected Fraud or Canceled.

Create a credit memo

Determine the type of refund that you want to issue. Then, use one of the following methods to generate the credit memo and issue a refund.

• If you create a credit memo for an order that includes gift options, the refund for the gift wrapping and/or printed card appears in the Refund Totals section of the credit memo. To exclude these costs from the amount to be refunded, enter the amount as an Adjustment Fee. If multiple credit memos are issued for the same order, the refund for gift options appears in only the first credit memo.

Method 1: Issue a refund for a credit purchase

1. On the Admin sidebar, go to Sales > Orders.

2. Find the order in the grid, and click View.

   Orders grid

3. If the Credit Memo button is visible in the button bar, do one of the following:

   • To issue an offline refund, go to step #6.
   • To issue an online refund, continue with step #4.

4. Click Invoices in the left panel.

   Invoices grid

5. Find the invoice in the grid and click View.

6. Scroll down to the Order Total section of the invoice, verify that the invoice is set to Capture Online, and click Submit Invoice.

   Capture Online

7. Click Back to return to the order, and then click Credit Memo.

   Create Credit Memo

8. Verify the information in the Items to Refund section and do the following, if applicable:

   • To return the product to inventory, select the Return to Stock checkbox.

     The product returns to stock automatically if Product Stock Options is set to Automatically Return Credit Memo Item to Stock. With Magento Inventory Management enabled, the item returns to the source that sent the shipment.

   • Update the Qty to Refund, and click Update Qty’s.

     Items to Refund

9. Update the Refunds Totals section as follows:

   • For Refund Shipping, enter any amount that is to be refunded from the shipping fee.

     This field initially shows the total shipping amount from the order that is available for refund. It is equal to the full shipping amount from the order, less any shipping amount that has already been refunded. Like the quantity, the amount can be reduced, but not increased.

   • For Adjustment Refund, enter a value to be added to the total amount refunded as an additional refund that does not apply to any particular part of the order (shipping, items, or tax). It also can be used for partial refund with virtual money, such as a gift card, when an administrator wants to refund a non-virtual payment method first.

     The amount entered cannot raise the total refund higher than the paid amount.

   • For Adjustment Fee, enter a value to be subtracted from the total amount refunded.

     This amount is not subtracted from a specific section of the order such as shipping, items, or tax.

10. To add a comment, enter the text for Credit Memo Comments.

    • To send an email notification to the customer, select the Email Copy of Credit Memo checkbox.

11. Do the following, as applicable:

    • To refund the amount to the customer’s store credit, select the Refund to Store Credit checkbox.

    • To refund the amount to the customer’s company credit, select the Refund to Company Credit checkbox.

    • To issue on offline refund, click Refund Offline.

    • To issue an online refund, click Refund.

    • If the purchase was paid with company credit, click Refund to Company Credit.

    Items to Refund

Method 2: Issue an offline refund for check or money order

1. On the Admin sidebar, go to Sales > Orders.

2. Find the completed order in the grid and click the View link to open it.

3. In the button bar at the top of the page, click Invoice.

4. Scroll down to the bottom of the page and click Submit Invoice.

5. In the button bar at the top of the invoice, click Credit Memo.

   Create Credit Memo

6. Verify the information in the Items to Refund section and do the following, if applicable:

   • Select the Return to Stock checkbox if you want to return the returned product to inventory.

     With Magento Inventory Management enabled, the inventory quantity returns to the source that sent the shipment. The product returns to stock automatically if Product Stock Options is set to Automatically Return Credit Memo Item to Stock.

   • Update the Qty to Refund and click Update Qty’s.

     The amount to be credited cannot exceed the maximum amount that is available for refund.

   Items to Refund

7. Update the Refunds Totals section as applicable:

   • For Refund Shipping, enter any amount that is to be refunded from the shipping fee.

     This field initially displays the total shipping amount from the order that is available for refund. It is equal to the full shipping amount from the order, less any shipping amount that has already been refunded. Like the quantity, the amount can be reduced, but not increased.

   • For Adjustment Refund, enter a value to be added to the total amount refunded as an additional refund that does not apply to any particular part of the order (shipping, items, or tax). It also can be used for partial refund with virtual money, such as a gift card, when an administrator wants to refund a non-virtual payment method first.

     The amount entered cannot raise the total refund higher than the paid amount.

   • For Adjustment Fee, enter a value to be subtracted from the total amount refunded.

     This amount is not subtracted from a specific section of the order such as shipping, items, or tax.

   • If the purchase was paid with store credit, select the Refund to Store Credit checkbox to credit the amount to the customer account balance.

8. To add a comment, enter the text in the Credit Memo Comments box and do the following:

   • To send an email notification to the customer, select the Email Copy of Credit Memo checkbox.

   • To include the comments you have entered in the email, select the Append Comments checkbox.

     The status of a credit memo notification appears in the completed credit memo next to the credit memo number.

     Refund Totals

9. To complete the process and issue the refund, click Refund Offline.

Credit memo reference

Credit memos include the following sections.

Order & Account Information

Account Information

Address Information

Payment & Shipping Method

Items Refunded

Credit Memo History

Credit Memo Totals

Refund buttons

The payment method used for the order determines the refund buttons that are available at the top of a credit memo page.