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SOP For Accounting For Charge Backs 

SOP Number: Finance and Accounting – 35

Department: Accounts Receivable

Time to Train: 30 Minutes

Purpose of Accounting For Charge Backs :

Accounting for chargebacks requires careful attention to detail and accurate record-keeping. Chargebacks occur when a customer disputes a charge made on their credit card or requests a refund for goods or services they believe were not delivered as promised. These chargebacks can have significant financial implications for businesses, affecting their revenue, cash flow, and overall profitability.

To properly account for chargebacks, businesses need to follow certain steps. Firstly, they must identify the reason behind each chargeback and categorize them accordingly. The purpose of this policy is to standardize the method for processing all CHARGE BACKS and minimizing write-off. It is the responsibility of the Controller to ensure that the following methods are used to process CHARGE BACKS. 

Returned Checks SOP Procedures:

1. When CHARGE BACKS 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 the guest, advise the credit card company that a credit was issued.

  1. Prepare an adjustment voucher and post through the PMS System.

  2. Code to the corresponding revenue account if an error in charging.

  3. Code to the correct bad debt account if considered a write-off.

  4. Adjust the appropriate statistical account as necessary.

Training Summary Questions:

Q1. Who is responsible for ensuring that the methods are used to process charge backs?

Q2. How do I respond to a charge back or retrieval request?


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Authored and managed by Augustine, a hotelier with over 20 years of experience in the industry. He has a 3-year diploma with 'honors' from the American Hotel & Lodging Educational Institute and a Bachelor of Computer Application - BCA Degree.