The rule for refunds in Frank is simple: categorize the refund the same way the original transaction was categorized. It's not about which direction the money is moving, it's about where the money started.
Receiving a Refund from a Vendor
If you paid for something as an expense and the vendor refunds you, that refund should stay as an Expense, even though money is coming into your account.
Example: You bought office supplies on Amazon (expense). The package never arrived, and Amazon refunded you. That refund is still an expense, it just reduces your total spend. Frank tracks positives and negatives for each transaction type, so the refund correctly cancels out the original cost.
How to categorize it:
Find the refund on your Transactions page and click it.
Set the Transaction type to Expense.
Match the Department and Category to the original expense. If the original purchase was General & Administrative (G&A) / Office Supplies, use the same here.
If this vendor refunds you regularly, select Create a rule so Frank handles it automatically.
Issuing a Refund to a Client
If you received money from a client as income and then had to give it back, that refund should stay as Income, even though money is leaving your account.
Example: A client paid you $5,000 (income). They asked for their money back, and you refunded them. Frank needs this to remain income, so it deducts from your revenue correctly, $5,000 in, $5,000 out, net zero.
How to categorize it:
Find the outgoing refund on your Transactions page and click it.
Set the Transaction type to Income.
Set the Department to Revenue.
Set the Category to Refunds & Returns.
Summary
The direction of the money doesn't determine how to categorize a refund, the original transaction does. Got a refund from a vendor? Keep it as an expense, same department and category as the purchase. Issued a refund to a client? Keep it as income under the Revenue department, Refunds & Returns category. This way, Frank nets everything off correctly in your reports.