In SIMS you need to add FSM eligibility (See this link for details how to do this). When the correct eligibility dates are added you then need to run the NRS SIMS extractor. This is mainly used to export the FSM, biometric consent field and photos from SIMS into the NRS system.
One this has been done and the ParentPay system updates with the NRS after the pre-defined time (or you can manually update this on the NRS server) the finance should take care of itself. It will automatically credit pupil accounts back if theyr have used their own money but eligible for FSM during that period.
Hope this makes sense and is of help.