Since the emergence of COVID-19, many businesses have been plagued with issues surrounding cancellations and delays, resulting in a higher volume of refund requests.
This has created challenges for small businesses, partially in relation to cash-flow and administrative processes. While the ACCC has created some guidelines regarding a business’s obligations under Australian Consumer Law, many are still uncertain on the best practices to follow when providing refunds.
So, here are a few tips to help you improve your business refund process.
Communicate with your customers
Refunds often result due to the cancellation of an event, holiday or the delay in a service or product; which can leave a business in a busy and frantic state. With that in mind, it’s important to remember your customer, and communicate with them as the situation unfolds.
It may be that in doing so, some customers are happy to hold off on requesting a refund until further information is provided regarding a new date for an event or service. Likewise, some customers may only request a partial refund—which can greatly assist with cash flow.
Ultimately, coming to an amicable solution with your customer, in regards to their funds, should be the first step in your process. Unfortunately, this isn’t always possible, so if you do encounter a customer dispute the ACCC has some advice which may assist.
Consider how you facilitate refunds
Once you’ve come to a solution regarding a customer’s refund amount, you’ll need to process the transaction.
Where possible, make sure your customer’s refund goes back onto the card that was used for the original purchase. Try to avoid issuing a credit by way of bank transfer into the customer’s account, unless it’s done as a last resort.
Processing the refund back to your customer’s payment card helps your business avoid chargebacks, as the bank of the purchasing card will have visibility that a refund has occurred. If you don’t do this, a customer may be able to dispute the fact that you’ve provided a refund.
For international payments, customers might find it more useful to pay in their local currency. Look for payment providers who allow you to refund in foreign currencies, as your customer will receive the exact amount they originally paid back onto their card.
Where feasible, card payments and refunds should be your preference, over cash or bank transfer to ensure your business is protected.
Create a transparent refund policy
If you haven’t yet updated or created a refund policy for your business, now is the time. With refunds taking place more than ever before, it’s a good idea to ensure your business policy protects you and your customers.
It may be worth including, within your policy, the optional solution of a partial refund or credit instead. A customer may be just as happy to receive a gift card to the same value or credit-note, in place of the full amount, which will help your business with cash flow during this difficult period.
At the end of the day, the most important factor is that you always remain transparent and honest with your customers. Make sure your refund policy is easily accessible for customers and is clear and comprehensible, to avoid any potential disputes.
For more information on the difference between a refund and dispute, click here.