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Bringing an Invoice to a Zero Balance
Bringing an Invoice to a Zero Balance

How to record refunds, etc to an invoice

Brent Kleinheksel avatar
Written by Brent Kleinheksel
Updated over a week ago

An invoice can be in one of four states:

1) Unconfirmed

2) Confirmed

3) Paid-in-Full

4) Refund Owed

An invoice is in an unconfirmed state if the guest has not paid the reservation deposit requirement. A typical reservation deposit requirement is 50% of the rental charges or 100% if the rental is <30 days to arrival.


All invoices with an "Unconfirmed" status are displayed in the pending reservations area of your dashboard. That queue is telling you that a payment needs to be processed to confirm the reservation.

The invoice is always your point of reference. If you receive a check in the mail for a payment, it must be recorded against the correct invoice. If you owe a security deposit refund to a guest after departure it must both be matched against the invoice and recorded within the invoice to ultimately bring that invoice to zero.

Pending Reservations Example (BAD)

This is an example of a property manager who is NOT CLOSING OUT EACH INVOICE AND BRINGING IT TO A ZERO BALANCE.  Every one of those invoices is in the past and thy all show that the guest still owes (or is owed) money. This is evident because the reservations are still in a pending status. So either the property manager did not collect enough money (unlikely) or they collected the money and failed to record it on the invoice (likely).

Pending Reservations Example (GOOD)

The property manager is doing a great job.  The pending reservations queue is empty.  That means that property manager has made an effort to process all reservations in a timely manner.  The pending reservations and balances due queues should always be empty.  If they are not, those reservations are in need of attention as a payment or refund must be applied to the invoice to either confirm it (pending reservations) or bring it to a zero balance (balances due).

Refund Process When Only a Portion of the Security Deposit is Refunded.

If a property manager incurs damage and refunds only a portion of the security deposit, then only a portion of the deposit is refunded, and the remaining amount which the invoice shows as being owed to the guest needs to be countered by adding a "breakage fee" to the invoice and applying it against the security deposit amount that is showed as being owed.

In this example:

  1. $742.00 in rental charges 

  2. $100.00 security deposit, so $842.00 is due. 

  3. However, the property manager processed another payment of $100.00, 

  4. resulting in a credit balance in both the rental charges and the other deposits columns. Thus the guest is currently owed $200.00 

The guest departs and the property manager notices the guest broke an expensive lamp and did not report it. Per the property owner's policies, she wants to retain $50.00 of the $100.00 security deposit and must update the invoice appropriately.

In item #5 she creates a new fee and calls it a "Breakage Fee" and then chooses to assess the fee against the security deposit (Item #6). IT IS VERY IMPORTANT IF YOU ARE WISHING TO REDUCE THE AMOUNT OF SECURITY DEPOSIT REFUNDED that you first create a fee and assess the charge against the security deposit and not rental charges. In step #7 she sets the amount of the fee at $50.00.

The result is:

  1.  that a breakage fee has been added to the invoice for $50.00,

  2. however the breakage feee has already been paid for from the security deposit monies already collected  and thus all that is owed to the guest is the remaining $50.00 of the security deposit and the $100.00 which the property accidentally overcharged the guest (item #3) resulting in a total credit due to the guest of $150.00 (item #4).

Guest Refunds

Because the property owes the guest a refund for both the security deposit ($50.00) and an overpayment of rental charges ($100.00) two separate refunds must be recorded to bring this invoice to zero balance.

Step #1: Press the Record Refund icon

Step #2: Enter the amount of the refund

Step #3: Choose whether to apply the refund towards the security deposit or rental charges

Step #4: Choose the refund method

Step #5: If via check, record the check # of the refund

Step #6: Press "Record Refund"

The transaction history of the invoice will update and you can now see that the balance of the Other Deposits column has been reduced to zero after the security deposit refund has been recorded. Now all that is left is to issue another refund for $100.00 and apply it towards the rental charges balance.

The final invoice now accurately reflects what transpired with this particular guest. The invoice now has a zero remaining balance (item #1) and reflects the rental charges refund due to the overpayment and both the rental charges and the security deposit accounts have a zero balance.

This invoice is done!!

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