How To Process Chargebacks
Purpose of Accounting For Charge Backs :
In the realm of finance and accounting, chargebacks can be a complex and challenging topic to navigate. In essence, a chargeback occurs when a customer disputes a charge on their credit or debit card and the funds are returned to the customer. This can happen for a variety of reasons, such as fraud, incorrect charges, or disputes over the quality of goods or services received.
As a result, accounting for chargebacks can be tricky. It’s important to ensure that the proper accounts are credited and debited and that any related expenses or revenue are properly recorded. This is where the SOP (Standard Operating Procedure) for finance and accounting comes in.
The SOP for accounting for chargebacks should outline the steps that need to be taken when a chargeback occurs. This may include verifying the reason for the chargeback, determining the correct accounts to be debited and credited, and ensuring that any related expenses or revenue are recorded properly.
By having a clear and concise SOP in place, finance and accounting teams can ensure that chargebacks are handled efficiently and accurately. This can help to minimize the impact of chargebacks on the company’s financial statements and maintain the integrity of the company’s financial records.
Returned Checks SOP Procedures:
1. When CHARGEBACKS OR RETRIEVAL REQUESTS are received, the Accounting Department must respond in the prescribed time for each credit card company and maintain a log of action taken.
2. When a credit is due to the guest, advise the credit card company that a credit was issued.
- Prepare an adjustment voucher and post it through the PMS System.
- Code to the corresponding revenue account if an error in charging.
- Code to the correct bad debt account is considered a write-off.
- Adjust the appropriate statistical account as necessary.
Training Summary Questions:
- What is the purpose of accounting for chargebacks?
- Explain the impact chargebacks can have on businesses. How do they affect revenue, cash flow, and overall profitability?
- What steps should businesses follow to properly account for chargebacks?
- Who is responsible for ensuring that the prescribed methods are used to process chargebacks, according to the article?
- Describe the first step businesses should take when chargebacks or retrieval requests are received, according to the article.
SOP Number: Finance and Accounting SOP – 35 Department: Accounts Receivable Time to Train: 30 Minutes