Melio Refund Processing Guidelines
Overview
When mystery shoppers don't cash their checks, Melio refunds the money to our account. This creates tracking issues because the original payment shows as "matched" in QuickBooks but we still owe the shopper money.
The Problem
Original payment: Shows as completed/matched in QuickBooks
Reality: Shopper never received payment, money was refunded to us
Result: Books show shopper was paid, but we still owe them money
Solution Process
Step 1: Record the Melio Refund via Bank Matching
When the Melio refund appears in your bank feeds:
Go to Banking → Banking tab
Find the Melio refund transaction (incoming deposit)
Click "Match" or "Categorize" (do NOT click "Add")
Set up the transaction:
Category: Accounts Payable
Vendor/Customer: The mystery shopper's name
Description/Memo: "Melio refund - uncashed check [date]"
Save
What this does: Creates a vendor credit for the shopper, showing they "owe" us the refund amount
Step 2: Cancel Original Payment in Melio
To make the original bill available for repayment:
Log into Melio
Go to Payments → Payment History
Find the uncashed payment
Click on the payment
Look for "Cancel Payment" or "Reverse Payment" option
Follow Melio's prompts to cancel
Important: This should make the original bill "open" again in QuickBooks
Step 3: Reprocess Payment in Melio
Go to Melio dashboard
The original bill should now appear as unpaid in your pending bills
Process the payment normally through Melio (same as any other payment)
Melio will deduct the money from your bank account again
Step 4: Verify in QuickBooks
Check the mystery shopper's vendor account:
Go to Vendors → Vendor Center
Find the shopper
You should see:
Original payment (may show as cancelled after Step 2)
Vendor credit from refund
Original bill should show as "open" again
Step 5: Match the New Payment in Bank Feeds
When the new Melio payment appears in your bank feeds:
Go to Banking → Banking tab
Find the new outgoing Melio payment (debit/withdrawal)
Click "Match" or "Categorize"
Set up the transaction:
Category: Accounts Payable
Vendor/Customer: The mystery shopper's name
Description/Memo: "Payment to [shopper name] - replacement check"
Save
What this does: Records the new payment to the shopper, which will offset against the vendor credit from Step 1, bringing their balance to zero.
Final Result
After following these steps:
✅ Refund is properly recorded and bank reconciled
✅ Original bill is cancelled and reopened
✅ Mystery shopper gets paid with new check
✅ New payment is properly recorded and reconciled
✅ Shopper's vendor balance returns to zero
✅ Books accurately reflect all transactions
Important Notes
Bank Matching: Always use bank matching instead of manual deposits for efficiency
Category: Always use "Accounts Payable" as the category for both refunds and payments
Timing: Process the refund immediately when it appears in bank feeds
Documentation: Include clear memos for easy tracking
Balance Check: After Step 5, the shopper's vendor balance should be zero
Troubleshooting
If the original bill doesn't become "open" after canceling in Melio:
Contact Melio support
You may need to manually create a new bill for the shopper
If you can't find the cancel option in Melio:
Some payments may have different cancellation windows
Check Melio's help documentation or contact support
If the refund doesn't appear in bank feeds:
Check that your bank connection is working
Manually refresh the bank feed
May need to wait 1-2 business days for the transaction to appear
If the new payment doesn't appear in bank feeds:
Wait 1-2 business days for Melio to process
Check that the payment actually went through in Melio
Manually refresh bank feeds
Training Checklist
When training someone on this process, ensure they can:
Navigate to Banking tab in QuickBooks
Properly categorize bank transactions to Accounts Payable
Distinguish between "Add" and "Categorize" in bank feeds
Access and cancel payments in Melio
Process new payments in Melio
Match both incoming and outgoing transactions to Accounts Payable
Verify vendor account balances show zero after completion
