Navigate to: Client Profile > Invoice > Issue Refund
This article covers refunds processed without Shepherd Pay — cash, check, CareCredit, Other, or to a credit balance. For refunds processed through Shepherd Pay, see the Shepherd Pay: Payments and Refunds article.
What You Need to Know
Before you can issue a refund in Shepherd, the invoice must have a negative balance. Shepherd does not allow you to issue a refund from a paid, balanced invoice.
A negative balance is created by modifying the invoice first. This means you need to reduce what the client owes before Shepherd will have anything to refund. The three ways to create a negative balance are:
Return a product — removes the item's value from the invoice
Apply a discount — reduces the price of a line item or the invoice total
Remove or cancel a line item — reduces the invoice total
Once the invoice shows a negative balance, Issue Refund becomes the step that returns that amount to the client.
If you do not see the Issue Refund option, contact your Shepherd admin to confirm your user role includes this permission.
Quick Start Guide
To refund a client back to their original payment method without Shepherd Pay:
Modify the invoice to create a negative balance.
(Returning a product, applying a discount, or removing a line item.)
Open the invoice that shows a negative balance due.
Click Issue Refund.
(It’s the blue button in the right side bar under invoice summary.)
Turn the Shepherd Pay toggle off.
Select the original payment method.
(e.g., Cash, Check, CareCredit, Other)
Enter the refund amount.
Click Check Out.
The invoice will be updated to reflect the refund.
Step 1: Create a Negative Balance
Before issuing any refund, the invoice must reflect a negative balance. Choose the method that fits the situation.
Return a Product
Use this when a client is returning a physical item they purchased. The return removes the item's value from the invoice and creates the negative balance needed to issue a refund.
Before a product can be returned, a payment must have been made and the invoice must be in Checked Out status.
Open the invoice that contains the item being returned.
Locate the product in the invoice line items.
In the Return Quantity column, enter the quantity being returned.
Check Restock Item if the product should be added back to inventory.
Click Return Items, located below the Take Payment button.
When prompted, select where to attach the return:
If an active invoice exists, you can add the return to it.
If no active invoice exists, select Create New Invoice to generate one specifically for the return.
Click Return.
The negative balance will appear on the invoice the return was attached to — not on the original invoice. Open that invoice to proceed to Step 2 and issue the refund.
Apply a Discount
Use this when you are reducing the amount a client owes — for example, as a courtesy adjustment or correction — without returning a physical item.
Open the invoice.
Locate the line item to be discounted.
Apply a discount to that item or to the invoice total.
Confirm the invoice now shows a negative balance before proceeding to Issue Refund.
Remove or Cancel a Line Item
Use this when a service or product was added to the invoice in error, or when a planned service was cancelled before it was performed.
Open the invoice.
Remove or cancel the relevant line item.
Confirm the invoice now shows a negative balance before proceeding to Issue Refund.
Step 2: Issue the Refund
Once the invoice shows a negative balance, you can issue the refund.
Refund to the Original Payment Method
Use this when you want to return the money directly to the client using the same method they originally paid with.
Open the invoice with the negative balance.
Click Issue Refund.
Turn the Shepherd Pay toggle off.
Select the payment method that matches how the client originally paid (e.g., Cash, Check, CareCredit, Other).
Enter the refund amount.
Click Check Out.
Refund to Credit Balance
Use this when you want to hold the refund amount on the client's account as a credit to apply toward a future invoice instead of returning it directly.
Open the invoice with the negative balance.
Click Issue Refund.
Turn the Shepherd Pay toggle off.
Select Credit Balance as the refund method.
Enter the refund amount.
Click Check Out.
The amount will appear as a credit on the client's account, ready to apply to a future invoice.
Applying a Credit Balance
Credit balances are created when a client overpays, or when a refund is issued to their credit balance. A credit balance can be applied toward any open invoice.
Apply Credit to a Single Invoice
Open the client's profile and navigate to the target invoice.
Click Take Payment.
Turn the Shepherd Pay toggle off.
Select Credit Balance as the payment method.
Enter the amount to apply and select the invoice.
Click Check Out.
Important: If no invoice is selected during payment, the amount will default to the client's credit balance rather than being applied to a specific invoice.
Always confirm the correct invoice is selected before clicking Check Out.
Apply Credit Across Multiple Invoices
Open the client's profile.
Click Take Payment.
Turn the Pay All Invoices toggle on.
Select Credit Balance as the payment method.
Click Check Out.
Apply a Partial Credit
To apply only part of a credit balance to an invoice:
Select Credit Balance as the payment method.
Enter the partial amount to apply.
Select a second payment method for the remaining balance.
Transfer a Credit Between Locations
If a credit balance needs to move from one clinic location to another:
Refund the credit at the source location using Other as the refund type.
Apply the credit at the destination location using Other as the payment method.
Writing Off a Balance
To write off an outstanding balance that will not be collected:
Add a line item labeled Write Off or Collections and apply a discount to bring the invoice total to zero.
Alternatively, create a custom payment type specifically for tracking write-offs.
Applying a Non-Refundable Credit Balance
If a client has a credit balance that should not be returned to them — for example, due to a no-show fee — you can apply it against a charge instead:
Create a product item labeled No Show – Non-Refundable Fee (or similar).
Add this item to a quick invoice for the client.
Apply the existing credit balance to pay the invoice.
This uses the credit to cover the fee without returning money to the client.
Voiding a Payment
Voiding a payment removes it entirely and restores the balance back to the invoice as outstanding. This is different from a refund — a refund returns money to the client, while a void simply undoes the payment as if it was never made.
Use a void when a payment needs to be undone entirely — for example, if it was collected with the wrong payment method. Voiding removes the payment and restores the balance to the invoice so it can be collected again correctly. This is different from a refund, which returns money to the client.
Voiding is controlled by user permissions. If you do not see the option to void a payment, contact your Shepherd admin to confirm your role includes this permission.
How to Void a Payment
Before voiding, the invoice must be in Checked Out status.
Go to Clients/Patients and open the client's profile.
Scroll to the Payments section.
Find the payment you want to void.
Click the three dots (⋮) under the Actions column.
Select Void.
Confirm by selecting Yes in the popup.
Once voided, the payment will be removed and the invoice balance will be restored to outstanding. You can then collect a new payment as needed.
Frequently Asked Questions
Why is my refund going back to outstanding instead of being returned to the client?
This happens when Issue Refund is used on an invoice that does not have a negative balance. Shepherd requires a negative balance before a refund can be issued. Return a product, apply a discount, or remove a line item first to create the negative balance, then issue the refund.
I just need to do a partial refund — do I still need to modify the invoice?
Yes. Even for a partial refund, you need to create a negative balance on the invoice first that matches the amount you want to refund. Apply a discount or remove the relevant line item for the partial amount, then issue the refund from that negative balance.
How do I confirm a refund was processed?
You can check this in the client's profile under the Financial Tab > Payments
You can also check this in the client's Activity Log:
Open the client profile.
Click the zig-zag arrow in the top right corner.
Review the Activity Log and search for "Refund" or the client's email address.
Each entry shows the full message and the time it was processed.
Can a credit balance be used across multiple invoices at once?
Yes. Use the Pay All Invoices toggle when taking a payment and select Credit Balance as the payment method to apply available credit across all open invoices in a single step.