Both refunds and disputes must be handled manually. Famly is not able to process these automatically in the app. This guide explains how to handle refunds and disputes correctly, and what to expect in each situation.
What Is a Refund?
A refund is when you return money to a parent for a payment they have already made. This might be needed in situations such as:
A child leaves unexpectedly, and the parent has overpaid
A parent accidentally pays too much
A service issue or complaint needs to be resolved
A discount or voucher was not applied correctly
💡 Refunds must be processed outside of Famly, either through your bank or your payment processor. Once the refund has been completed, you should record it in Famly to keep your accounts accurate
Alternatives to Refunds
Before issuing a refund, it may be worth considering whether one of the following alternatives would work better.
1. Offering a discount
You can apply a discount to a future invoice instead of refunding money.
How to do this:
Agree on the discount amount with the parent
Apply the discount to their next invoice in Famly
Record the reason for the discount in the notes
2. Applying credit to future invoices
Another option is to apply the overpayment as credit.
How to do this:
Record the overpayment as a credit in Famly
Apply the credit when creating the next invoice
Let the parent know how much credit they have available
3. Managing the refund outside Famly and updating the balance
If you refund the money directly, you can reflect this in Famly.
How to do this:
Transfer the money back to the parent via bank transfer
Record a negative payment in Famly to reflect the refund
Add detailed notes explaining the transaction
Keep proof of the bank transfer for your records
Discussing these options with parents can sometimes save time and reduce administrative work, while still resolving the issue fairly.
Refunding Tax-Free Childcare Payments
Special TFC Refund Requirements
Tax-Free Childcare refunds have strict requirements set by HMRC. These must be followed exactly, or the refund will fail.
How to Process a TFC Refund
If you need to refund a Tax-Free Childcare payment, follow the steps below carefully.
Refund requirements for TFC
Refunds must be paid from the same bank account that received the original payment
Refunds must go back to the childcare account the payment came from
You must include the parent’s unique 13-digit childcare account number (starting with 1100) as the payment reference
If the parent cannot provide this number, contact the Childcare Service helpline for support
How to make a TFC refund
Use your childcare business bank account and enter the following details:
Account name: Tax Free Childcare
Account number: 10027165
Sort code: 60-89-71
Reference: Parent’s unique 13-digit childcare account number
Select business account when making the refund.
TFC refund timeline
BACS: 3–5 working days
Faster Payments: Up to 24 hours
Understanding Disputes
What Is a Dispute?
A dispute, sometimes called a chargeback, is when a parent contacts their bank or card provider to reverse a payment instead of contacting you directly.
Why disputes happen:
The parent does not recognise the charge on their statement
The parent claims they did not authorise the payment
The parent believes the service was not provided as agreed
The parent is unhappy with the service and requests their money back
Rarely, actual fraud where someone else used the parent's card
What happens when a dispute is filed:
The parent contacts their bank, not the nursery
The bank immediately withdraws the funds from your Stripe account
You receive an email from Famly with details and next steps
If the dispute relates to a card payment, you may be able to submit evidence within a limited timeframe
The bank reviews the case and makes the final decision
If the dispute is upheld in your favour, the funds are returned
If the dispute is upheld in the parent's favour, the funds are permanently lost
Important to know
Disputes on BACS payments are automatically decided in favour of the parent. These cannot be contested, and no evidence can be submitted, so the funds are always lost
Only disputes on card payments can be challenged by the nursery
Even when strong evidence is submitted, banks often still decide in favour of the parent. Submitting evidence gives you the best chance of recovering funds, but it does not guarantee the outcome
How Disputes Affect You
Financial impact
Funds are withdrawn immediately, before a decision is made
If you lose, you lose the payment amount
If you win, the funds are returned, but time and effort are still required
Operational impact
Time spent gathering evidence and responding
Additional administrative work
Potential strain on your relationship with the parent
When a Parent Disputes a Payment
You'll be notified: If a parent has disputed a payment, we'll reach out to you to help you respond.
What we need from you: Evidence to support that the payment was legitimate and the service was provided (see "Gather Evidence" section below).
How to Respond to a Dispute
Step 1: Understand the Dispute Reason
Reason | What it means | Evidence needed |
Unrecognised charge | Parent does not recognise the payment | Invoices, service records, communication |
Service not received | Parent claims child did not attend | Attendance records, registers, photos |
Duplicate charge | Parent believes they were charged twice | Payment records showing a single charge |
Incorrect amount | Parent disputes the amount charged | Invoice and fee schedule |
Fraudulent | Genuine fraud, rare | Proof of authorisation and sign-in records |
Step 2: Gather Evidence
When responding to a dispute, you should submit clear evidence that shows the parent agreed to the charges and that the service was provided. You do not need every type of evidence listed below. Instead, focus on submitting the strongest and most relevant documents you have available.
Recommended evidence to collect:
Proof that the parent agreed to the charges
A signed contract or registration form
A document showing the bill payer’s signature
Written agreement to your payment terms or fee structure
Proof that the service was provided
Attendance records or registers showing dates of care
Service documentation confirming the child received care on specific dates
Staff records or notes supporting delivery of the service
Communication with the parent
Messages or emails acknowledging invoices or fees
Any discussion confirming that the child attended, or the place was held
Screenshots showing the parent accepted or discussed charges
Proof of payment notification
A receipt or invoice sent to the parent
A billing confirmation message or statement
Submitting a combination of these documents gives you the best chance of supporting your case. Focus on clarity and relevance rather than quantity.
Step 3: Submit Your Response
Contact Famly Support via in-app chat or email at support@famly.co. Share all evidence you have gathered, and the support team will help you submit the response to the bank.
Step 4: Wait for the Decision
Typical timeline:
Bank review: 30–90 days
Possible outcomes:
You win, and funds are returned
You lose, and funds remain with the parent
A split decision is made, which is rare
Decisions are usually final and cannot be appealed.
Preventing Disputes
Preventing disputes is always easier than resolving them. Clear communication, accurate records, and making sure parents understand what they are being charged for can significantly reduce the risk of chargebacks. The tips below can help you avoid disputes and protect your setting if one does occur.
Communication best practices
Send clear, detailed invoices
Include an itemised breakdown, clear dates of service, visible due dates, and contact details for any questions.Use recognisable statement descriptors
Set a custom descriptor in your payment settings and use a nursery name parents will recognise, for example “Sunny Days Nursery” rather than a legal trading name.Respond quickly to parent questions
Address queries about charges, invoices, or services as soon as possible, ideally before a parent contacts their bank.Keep good records
Maintain accurate attendance records, communication logs, service delivery notes, and payment history.Be transparent about fees
Clearly communicate late payment fees, cancellation fees, additional charges, and any upcoming fee changes in advance.
Red flags for potential disputes
Watch out for parents who:
Repeatedly question charges or invoices
Express ongoing dissatisfaction with the service
Delay payments and then make a sudden payment
Stop responding to messages or emails
Mention contacting their bank
If you notice any of these red flags:
Reach out proactively to discuss their concerns
Try to resolve issues before they escalate
Keep detailed records of all communication
Consider a face-to-face conversation where appropriate
Offer alternatives such as discounts or credits before a dispute is raised
If you notice these signs, reach out early, document communication, and try to resolve concerns before they escalate.
Contract Protection
Clear contracts help prevent disputes and provide important protection if a payment is challenged. Making sure parents understand and agree to your terms sets clear expectations from the start.
Your parent contracts should clearly include:
Payment terms
Fee schedules
Cancellation policies
A dispute resolution process, encouraging parents to contact you first
An agreement to pay for services delivered
Having parents sign the contract provides:
Clear evidence that the parent agreed to your terms
Stronger protection if a dispute is raised
A shared understanding of expectations on both sides
Well-documented contracts can make a significant difference when responding to disputes and chargebacks.
Need Help?
Refund questions:
Contact Famly Support via in-app chat or email support@famly.co
Tax-Free Childcare refund support:
HMRC Childcare Service Helpline