Workflow 5: Invoices, Payments & Refunds — Finance Workflow
This workflow describes the complete financial transaction lifecycle — from creating a client invoice through collecting payment, reconciling the record, and handling refunds where required. Finance records must be auditable, accurate, and processed through approved channels. No financial record should ever be deleted to fix a mistake — use the correction workflows described here instead.
Prerequisites before starting:
- Invoice and payment modules are enabled.
- At least one payment gateway is configured if online payment is expected — test in sandbox before go-live.
- The client profile is complete with a valid billing email, correct currency, and applicable tax settings.
- You have Create Invoice, Send Invoice, and Record Payment permissions.
Quick Steps Summary
- Create invoice, add line items, tax, and due date — save as draft
- Validate totals and client details, then send
- Record payment with date, method, and transaction reference
- Verify invoice status updates to Paid
- For adjustments, use credit note or replacement invoice — never delete
Step-by-Step Workflow
- Create the Invoice: Navigate to Invoices > New Invoice. Select the client — their currency, billing email, and default payment terms load automatically from the client profile. Verify these are correct before adding line items.
- Add Line Items: Add each product or service as a separate line item. Include: item description, quantity, unit price, discount (if agreed), and applicable tax rate. Be specific in descriptions — vague line items cause client queries and slow down payment approval.
- Set Dates: Set the invoice date (issue date) and due date. If using default payment terms (e.g. Net 14), the due date is calculated automatically. Confirm this aligns with any payment terms agreed in the proposal or contract.
- Add Notes: Include payment instructions in the invoice Notes field — bank account details for manual transfers, or a link to the online payment portal. This reduces the number of payment queries from clients.
- Save as Draft and Validate: Always save as a draft first. Review the generated subtotal, tax breakdown, and grand total. Cross-reference against the approved quote or purchase order. Never send before validating totals.
- Send to Client: Once the draft is validated, click Send to Client. Review the email template and recipient address. Confirm and send. The invoice status updates from Draft to Sent.
- Record Incoming Payment: When payment is received (by bank transfer, cash, or online gateway), open the invoice and click Record Payment. Enter: amount received, payment date (actual receipt date), payment method, and transaction reference. Click Save — the invoice status updates to Paid or Partially Paid.
- Verify Payment Status: Confirm the invoice status updated correctly. For online gateway payments, verify the gateway transaction ID is recorded. Check that the payment appears in the client's payment history.
- Handle Adjustments or Refunds: If a correction is needed after an invoice has been sent:
- Minor amendment on draft: Edit the draft directly and resave before sending.
- Error on sent invoice: Issue a credit note against the original, then raise a corrected replacement invoice.
- Refund required: Open the payment record, initiate the refund workflow, document the authorisation and reason, and confirm the refund status from the gateway.
- Notify Client: For refunds or any invoice amendment that affects the client's payment, send a notification using the appropriate communications template. Update the invoice or payment record with a note confirming the client was informed.
Critical Finance Rule: Never delete invoices, payments, or refund records to correct mistakes. Use the approved correction workflow (credit notes, voids, refunds). All financial records must remain in the system for audit and tax compliance.
Expected Outcomes
- Invoices progress cleanly from Draft > Sent > Paid (or Overdue > Paid following follow-up).
- All payment records include a transaction reference and method for reconciliation.
- Refunds are documented with authorisation notes and confirmed gateway outcomes.
- Financial records are complete, accurate, and auditable at any point in time.
Common Errors
| Issue | Likely Cause | Fix |
|---|---|---|
| Invoice not delivered to client | Billing email invalid or SMTP not configured | Verify client's billing email and test SMTP delivery under Setup > Email Settings. |
| Online payment not linking to invoice | Gateway webhook not configured or failing | Check webhook URL and secret in the gateway settings. Send a test webhook event to verify. |
| Refund not available | Invoice/payment state not eligible or permission missing | Confirm payment status and request Manage Refunds permission from admin if needed. |
| Tax calculating incorrectly | Wrong rate on line item or client tax exemption | Review tax rate on each line item and check the client's tax profile setting. |