Chargebacks and disputes
A chargeback (dispute) happens when a customer challenges an online card payment with their bank — "I didn't make this", "I never received the goods". The bank takes the money back from Stripe immediately, before anyone decides who is right, and you get a fixed window (typically around a week — the exact deadline is shown) to respond with evidence.
Sales Scribe tracks the whole process and keeps your accounts correct at every stage, whatever the outcome. Here is what happens and what you should do.
The moment a dispute opens
Stripe withdraws the disputed amount plus a £20 dispute fee from your Stripe balance straight away. In Sales Scribe:
- A warning banner appears on the payment and on the invoice: how much is withheld, and the date you must respond by.
- Your accounts reflect the withdrawal immediately: the disputed money moves into a Disputed funds holding account (it isn't lost yet — if you win, it comes back), and the £20 fee is booked as an expense. The entry is dated on the day the dispute was opened in your organisation's time zone — a dispute opened at 23:30 UTC on 30 September is 1 October for a UK business in summer time, and is posted in October. Refunds and the closing of a dispute are dated the same way.
- The invoice stays paid for now — the sale still stands until the dispute is decided.
[Screenshot required: the "This payment is under dispute" warning banner with the respond-by date]
Decide: respond, or accept?
You respond in your Stripe dashboard (the banner tells you the deadline). Three paths:
| You… | Outcome | Cost to you |
|---|---|---|
| Accept the dispute (or do nothing by the deadline) | You lose by default | The money goes back to the customer + £20 fee |
| Fight it and win — submit evidence (delivery proof, signed terms, correspondence) and the bank rules for you | The withheld money is returned to you | £20 fee (Stripe may charge an additional countering fee that it returns when you win) |
| Fight it and lose | The money is gone | The money + the fees |
Doing nothing = losing. If you don't respond by the deadline, the customer's bank rules against you automatically. If you have good evidence, submit it — the win rate on documented disputes is meaningful.
If you win
The withheld money returns to your Stripe balance and your accounts update automatically — the Disputed funds holding empties back into your Stripe clearing account. The invoice was never touched: it stays paid. (Returned funds sit briefly in Stripe's pending balance, so they may miss the very next payout.)
If you lose (or accept)
The customer keeps the money — so the invoice becomes owed again, automatically: its balance is restored, and the payment shows a "Charged back" state with nothing left to allocate or refund. An entry in the invoice's audit history explains exactly what happened.
What to do next — do not void the invoice. The debt is real (the customer kept the goods or services). Your three options:
- Chase payment by another means — the invoice is simply awaiting payment again; ask for a bank transfer.
- Issue a credit note — if you concede the sale (for example, the goods came back), a credit note properly reverses the revenue and VAT. See Create a credit note.
- Write the debt off — if it's uncollectible, a write-off books it as a bad-debt expense. See Bad debt and write-offs.
Voiding is only for invoices issued in error — this invoice wasn't.
The customer is not emailed about a dispute — unlike a refund, they started this with their bank, and their bank keeps them informed. Any conversation about the underlying disagreement is yours to have directly.
The fees, plainly
- £20 when the dispute is received — charged by Stripe the moment the dispute opens. Non-refundable, win or lose.
- Stripe may charge a further countering fee when you submit evidence, which it returns if you win and keeps if you lose.
Both are booked automatically to your payment-processing-fees expense account, and any returned fee is credited back — your profit and loss always shows the true net cost.