In previous Post  you have seen the functional overview for Refund Functionality in R12. This post will give more insight.
WHAT IS REFUND
Refund  is kind of a single payment to a supplier or customer, usually to reimburse them for:
- one or more credit/debit memos on their supplier account in Oracle Payables
- one or more credit/debit memos on their customer account in Oracle Receivables
In order to understand, presume you want to stop doing Business with a supplier
- You have an overall $100 credit balance with the supplier,which consists of a Credit Memo of $250 and an unpaid Invoice of $150
- The supplier sends you a $100 refund for the credit balance.
- You enter a $100 Refund Payment (a $100 negative payment), and on the Select Invoices window, you select the outstanding invoice and credit memo.
Once you save the Refund  Payment, the invoice and credit memo are marked as paid, and you have no outstanding documents for the supplier
WHAT YOU NEED FOR THIS REFUND
- You need to do a set up the bank account in which you will deposit the refund. This can be the same bank account you use to make payments.
- Set up the appropriate cash account and, make sure cash clearing account is setup correctly
- The Payables documents you select must be in the same currency as the refund currency, and the sum of the documents you select must
equal the amount of the refund.
When you have debit/credit memo on a supplier or employee account (generally due to over payments or returns) which cannot be
matched directly to any existing open invoices, the supplier or employee may send you a refund for the memos. In that case, you can record the "refund" against those memo(s) by recording a "refund" type of payment in the Payment Workbench.
- A Refund payment is a "negative" dollar amount payment issued to record the reimbursement received, and to clear the specified memo(s)
(and possibly, invoices) from the Aging Report.
- A Refund Payment can also be used to clear a credit balance on a supplier's or employee's account, and can consist of any combination of
the following documents, as long as the sum is negative and equals the refund amount:
- Invoices and/or Expense Reports
- Debit and/or Credit Memos
- Refund Payments can also be used to reimburse you for a Prepayment you paid to a supplier or employee that was later determined to be
- If you receive a refund of a Prepayment, enter an invoice and apply the prepayment (if the Prepayment has not already been applied to an invoice),then enter a Debit Memo for the invoice.
- You can then pay the Debit Memo with the Refund Payment.
- Paying documents with a Refund Payment marks each selected document as paid, clears them from the Aging Report, and gives you a
complete supplier/employee transaction history.
- When you record a refund, Payables debits either your cash or cash clearing account, and credits either your expense or liability account,
depending on whether you use cash or accrual accounting.
- You can take discounts on payable documents (invoices/memos) that you mark as paid with a refund.
You can void a recorded Refund just as you would any other payment.
- Query up, then select the Refund in the Payments Workbench window.
- Choose the Actions button, and use the Void option in the Payment Actions window. You can then re-enter the refund and pay any open
and applicable invoices/memos or prepayments for the supplier/employee.
Hope this helps you to understand the refund functionlity.