Cancelling & Refunding Investments

Cancellation and refunding are two distinct actions that end an investment, depending on whether money has been received.

Cancellation vs. Refund

Cancellation

When Cancellation Happens

• Investor changes their mind -- the investor decides not to proceed before their payment completes
• Admin cancels -- an admin determines the investment should not proceed (e.g. compliance issue, investor request via email)
• SPV cancelled -- when an SPV is cancelled, all its active investments are cancelled too
• Payment permanently fails -- if a payment fails and all retries are exhausted, the investment may be cancelled

What Happens During Cancellation

1. All payment activity is cancelled -- this includes pending payment orders that haven't been sent to the bank, as well as submitted/processing payments that are already in the banking network. Pending wire instructions (expected payments) are also cancelled. For V1 investments that have a legacy Transfer record (from the pre-upgrade payment system), the Transfer is also cancelled during this step. This prevents a stale ACH transfer from completing after the investment is cancelled.
2. The investment status is set to Cancelled
3. The cancellation is recorded in the audit trail, including the reason, who performed it, and which payment orders/expected payments were cancelled
4. A domain event (investment.cancelled) is published for any downstream systems that need to react
5. The investor is no longer counted in the SPV's investor list

Important Notes on Cancellation

• Only committed or pending investments can be cancelled -- the system enforces this. If money has already arrived (status is "Funded"), you need a refund, not a cancellation.
• Cancellation cancels all non-terminal payment activity, including payments that are already being processed by the bank network. The admin should be aware that cancelling a submitted/processing payment may result in the payment still arriving (bank-side cancellation is not guaranteed).
• Cancelled investments cannot be un-cancelled -- if the investor wants to re-invest, they create a new investment.
• V1 investments with in-flight Transfers -- the legacy Transfer is cancelled alongside V2 payment activity. However, bank-side ACH cancellation is not guaranteed for transfers already in the banking network.
• A reason is optional but recommended for the audit trail.

Refund

When Refunds Happen

• Investor requests withdrawal -- after funding, the investor asks for their money back (before the funding close is settled)
• Deal cancelled after funding -- the deal falls through after investors have paid
• Admin-initiated -- an admin determines a refund is necessary (e.g. compliance issue discovered after funding)

What Happens During a Refund

1. An outbound payment order is created for the refund amount (ACH credit from the SPV's virtual account to the investor's bank account)
2. The refund is dispatched to the payment provider
3. The refund is recorded in the audit trail
4. When the refund payment completes, the ledger creates a reversal entry that undoes the original payment's accounting impact -- reducing the SPV's cash balance and restoring the investor's receivable
5. The investment stays "Funded" while the refund is processing -- it does not immediately change to "Refunded"
6. When the refund payment completes (confirmed by the payment provider), the system automatically transitions the investment to Refunded if all collected funds have been returned

Partial Refunds

The system supports partial refunds -- you can refund a portion of the collected amount rather than the full amount. When a partial refund completes:

• The investment stays "Funded" because there is still money collected
• The "total collected" figure reflects the net amount (inbound payments minus completed refunds)
• The "outstanding" figure adjusts accordingly
• You can initiate additional refunds as needed, as long as the refund amount doesn't exceed the remaining collected amount

Example:

• Investment: $25,000 (fully funded, $25,000 collected)
• Partial refund: $5,000
• After refund completes: total collected = $20,000, outstanding = $5,000, investment stays "Funded"
• Full refund of remaining $20,000 would then transition investment to "Refunded"

Important Notes on Refunds

• Only funded investments can be refunded -- the system enforces this. Committed or pending investments should be cancelled instead.
• Refund amount cannot exceed collected amount -- you cannot refund more than has been received.
• Investor needs a registered bank account -- the refund is sent via ACH credit, which requires a registered bank account on file.
• SPV needs an active virtual account -- the refund is sent from the SPV's virtual account. If the SPV does not have an active virtual account (e.g. a V1 SPV that was not migrated), the system will block the refund and advise you to process it manually outside the platform.
• Refunds are asynchronous -- the investment status does not change immediately. It transitions to "Refunded" only when the payment provider confirms the refund has completed. ACH refunds typically take 1-3 business days.
• Refunds before settlement -- refunds should ideally happen before the funding close is settled. After settlement, the process becomes more complex.

What Admins Should Know

• Check the investment status first -- the status tells you whether you need a cancellation (committed/pending) or refund (funded). The system enforces this: you cannot cancel a funded investment or refund an unfunded one.
• Cancellation is simpler -- no money moves, just status changes and payment cancellation. Use this when the investor hasn't paid yet.
• Refunds involve real money movement -- make sure the investor's bank account details are correct and the SPV's virtual account has sufficient funds.
• Refunds are not instant -- after initiating a refund, the investment stays "Funded" until the payment provider confirms completion. Monitor the payment order status for progress.
• Partial refunds are supported -- you don't have to refund the full amount. The system tracks net collected (inbound minus refunds) to keep all figures accurate.
• Always communicate with the investor -- whether cancelling or refunding, the investor should know what's happening and what to expect.
• Check the funding close -- if the investment was already assigned to a funding close, it needs to be removed before cancellation or refund. A settled funding close makes this more complex.
• Everything is audited -- cancellations and refunds are recorded in the audit trail with full details of who, when, why, and which payments were affected.