From time to time, a refund may be required for your client. If the payment was collected using Ignition, you can issue a refund from Ignition too.

Here is a step-by-step guide on how to request a refund in Ignition and how to manage the transaction in Xero.

Navigate to the Clients tab, use the search bar to find the client and select it to open the client card file. Click on the Invoices tab.

Click on the transaction for which you want to request a refund (it must be the full amount; you cannot do a partial refund). Select Request Refund.

Select the reason for the refund in the dropdown menu → Submit.

You will receive a Refund Request Received notification; click Close.

To view the history, click on the transaction and scroll down to view the Activity Trail. The activity trail will show when your refund request has been approved. The refund may take 7 to 10 days for the funds to appear in your client’s account.

As the original invoice has been paid in full and reconciled to the Ignition Clearing Account, you will need to create a Credit Note to account for the upcoming refund in your ledger. To create a credit note:

Ignition will issue your client their refund. To view the status of the refund in Ignition, navigate to Payments → Collections.

When the refund process is completed in Ignition, the Payment Progress status will change from Refund approved to Complete; this will be referred to as a Clawback (when funds are withdrawn from your next payout due to client refunds).

The specific refund amount is then deducted from your payout total. Refer to this article for more information about Clawbacks.

You can view the full payout and clawback data under the Payments and Payouts tab.

If you click on the transaction, you’ll see a detailed breakdown of the funds deposited into your account, along with any deductions (clawbacks) that have occurred. Since a refund was processed, the refunded amount is deducted from the original payout. Keep in mind that Ignition has already refunded your client directly.

As you can see in the example above, the original payout amount was $357.50, but I have to include the refund paid to the client of $5.50 so therefore it is deducted from the total payout amount. This occurred on the 14th Feb.

Navigate to Xero → Accounting → Bank Accounts → Click on Reconcile associated with the bank account where Ignition sends the Payouts.

Scroll down the transaction list until you find the deposit that matches the Ignition payout amount and date.

Most likely you will already have a bank rule applied where Xero will recognise a payout from Ignition and will want to code the full amount to the Ignition Clearing Account.

Before clicking OK to reconcile, you'll need to split the payout amount to separate the clawback (refund) from other invoices that have been paid.

Before proceeding, check the Ignition Clearing Account balance on your dashboard watchlist. If it’s not there, you can find it in your Chart of Accounts.

Here, the Clearing Account balance still shows the full amount of $357.50. This is because the $5.50 credit note hasn’t been marked as paid in Xero yet—but that’s what you'll do next.

Take a quick look at the IGN Clearing Account again—it should now match the payout amount.

Now, return to the Bank Reconciliation page in Xero and apply the Bank Rule to code the full amount.

Reminder: If you don’t have a bank rule set up, manually code the transaction to the Ignition Clearing Account or refer to article for a step-by-step guide.

Last, check the dashboard watchlist to confirm the Ignition Clearing Account balance back to NIL.