Refunding a guest: the payment, the credit note and your bookkeeping

It happens a few times a season. A guest cancels just inside the free window. Someone leaves a night early because something came up at home. A booking gets paid twice, once online and once at the door. Or you entered a rate wrong yourself and only notice afterwards.

Sending the money back is usually the easiest part of that day. The awkward part comes later: your invoice still shows the old amount, your VAT return still counts the full accommodation, the tourist tax you owe the municipality no longer matches, and three months on your bookkeeper is staring at a bank statement with an outgoing payment attached to nothing.

A refund and a credit note are two different things

This is where it almost always goes wrong, so let's start there.

A refund is a flow of money. An amount leaves your account and reaches the guest. That is all it is.

A credit note is a document. It corrects an invoice you already issued, with its own number, a reference to the original invoice, and the same VAT treatment as that original.

The two often go together, but not always:

• Already issued an invoice? You may not edit or delete it. You issue a credit note for the part that falls away, and register the refund separately.
• No invoice yet, only a prepayment or deposit? Registering the refund and adjusting the booking is enough. No credit note is needed for something that was never invoiced.
• Cancelled, but you keep the deposit? Then there is no refund and usually no credit note either. What you keep is a cancellation fee, and that is a different kind of revenue from accommodation — see setting your cancellation terms.

Keep those three situations apart and most of the work is already done.

VAT and tourist tax: what follows, what doesn't

Two amounts on your invoice behave differently when you refund.

VAT on accommodation simply follows the credit note. A credit note inherits the rate of the invoice it corrects — the rate that applied then, not today's rate. That matters now that the Belgian accommodation rate has been 12% since 1 March 2026: correcting an invoice from before that date means crediting at the old rate. More on that in VAT on accommodation in Belgium.

Tourist tax is not your money. You collect it per person per night and pass it on to the municipality. If a night does not happen, there is no taxable stay for that night — so it goes back to the guest in full, even though it feels like giving something away. Then remember to deduct it from your next declaration, or you pay it twice. The practical side is in handling tourist tax.

And then there is something that is not a refund at all: releasing a security deposit. That money was never revenue, so no credit note belongs with it and it should never show up in your turnover figures. See asking guests for a deposit.

Refund through the channel the money came in on

The golden rule: money goes back the way it arrived. Not for tidiness, but because otherwise you will never match it to your bank statement again.

• Paid online through your own payment provider? Issue the refund inside that provider, linked to the original transaction. The money returns to the same card and your statement shows a clean refund against the original payment. A separate transfer from your current account does not do that.
• Bank transfer? Ask for the IBAN in writing and put the booking reference in the description. Never take an IBAN down over the phone.
• Paid through an OTA that collects? You never held that money. The refund runs through the platform, and your side is only this: cancel or amend the booking and check that the later statement adds up. Never send money back yourself for a booking you have not been paid out for.
• Paid in cash? Hand over a dated receipt with the amount and the reason, and keep a copy. That is your only trace.

Partial refunds: calculate line by line

On a full cancellation the sum is simple. On half a stay it goes wrong the moment you start estimating "about half".

Take a three-night booking for two people: room €130 a night, breakfast €14 per person per night, tourist tax €2.50 per person per night, one-off cleaning fee €25. Total €390 + €84 + €15 + €25 = €514. The guests leave after two nights.

What falls away is not a third of the total:

• one night of room: €130
• two breakfasts: €28
• tourist tax for two people, one night: €5
• cleaning fee: nothing — you incurred that cost anyway

To refund: €163. On €514 that is 31.7%, not the 33% you would say off the top of your head. On one booking the difference is small; across a season with minimum stays, packages and surcharges it adds up. Always calculate per line, and decide per line whether it falls away.

Five things worth saving yourself

Never refund before the money has landed. Obvious, until someone cancels on the day the transfer is still in transit.

Write down the reason. "Refund" says nothing. "Cancelled within terms" or "1 night early departure" is still readable six months later, including to your bookkeeper.

Communicate the timing. A card refund rarely lands the same day. Say it takes a few working days and you will not hear about it again.

Release the freed-up nights. A refund without adjusting the calendar means you never sell that night again — see reselling nights freed up by a cancellation.

Keep one place where the paid amount is correct. If your refunds live in your payment provider and your invoices somewhere else, there is no single screen showing what a guest actually paid net. That is the subject of tracking payments per booking.

How to handle this in BedFlow PMS

In BedFlow PMS you register a refund as a payment on the booking with a negative amount, a date, a method and a reason. The paid balance for that booking updates immediately, so the booking overview keeps showing what came in net — no separate list, no second version of the truth.

If an invoice already exists, you issue a credit note alongside it, with its own number and a reference to the original. The original invoice stays untouched, which is the point. If you use an accounting integration, the credit note travels the same route as a regular invoice, at the same VAT rate as the document it corrects. The documentation walks through the steps.

In short

Always separate the money from the document: a refund is banking, a credit note is bookkeeping. Send money back through the channel it came in on, return tourist tax in full for nights that did not happen, and on a partial refund calculate per invoice line instead of with a percentage. Note the reason, because that question always comes back — usually months later.

Want refunds, credit notes and paid balances all visible in one place per booking? Try BedFlow PMS free for 30 days — no credit card required. The pricing is right there on the site.