I've spent hours on this issue, and wanted to share the fruits of my labor with the community.

An "Expense" tool can do everything* a "Refund Receipt" tool can do but better.

*"Refund Receipt" tool can send an email, but we don't use that service.

"Refund Receipt" can only be attached to BANK and P&L

"Expense" can be attached to BANK and whatever category you want, making it de facto better

Since Credit on Customer Account is part of Balance Sheet, and "Refund Receipt" tool is destitute and only affects P&L, it follows that

the only way to reduce a Balance on Customer Account, is to use a journal between Debtors() and Bank. And "Expense" tool is a limited version of such journal.

I will be using "Expense" to handle all refunds going forward, even though it sounds stupid.

I won't be the first or last to bemoan the naming convention that Quickbooks uses. I wish I could rename such tools locally to my business. 

The only tool with a REFUND in its name, can't handle a refund. And in its stead we must use EXPENSE, which i must confess had a lowly job of accounting for utilities until now.

I'm not happy, since i will have to manually go through all the refunds i refunded and set up an "expense" instead. It's not intuitive, no pun intended, and i hope people avoid this particular trap.