This is our process.  We write an A/R invoice and code it to 1790 Suspense to clear out the credit from the A/R subledger, then A/P writes a check and also codes it to 1790 Suspense creating a wash in the Suspense account.  Does anyone else have a better method?  If so, we would be interested to hear.

Another method (Detailed in KB2421) would be to record a deposit on the credit to the cash account, making sure to have the deposit number as “0000”

Next open the 1-3 Journal Transaction for that deposit add the payee address.

The final step would be to print the refund check out of 1-1 Check/Bank Charges.

This enables the check to be printed for the customer without the need of creating an AP invoice and using a vendor.

This response is for Sage 100 Contractor: 

I like your idea Justice of using a clearing or suspence account (as long as its ongoing balance is kept at zero or reconciled often).  However, I don't like having to set up customers as vendors just to issue a refund.  So instead I'd recommend posting the check through the GL at 1-1.  

But you can also post the AR invoice as a type 2-memo (so as not to affect the final contract amount) and post to the checking GL account down in the grid. Use 0000 as the invoice number (very important).    Then go to the GL transaction that your invoice created and add the customer name and address as the payee.  Now go to menu 1-1 GL checks, and print the check.   Don't forget to apply the overpayment to the newly created AR invoice through cash receipts (3-3) in order to clear them from the aging.

Doing it this way makes it obvious that the invoice was a refund. When you use a clearing account, you have to verify the other part of the transaction was posted correctly.