Typically, out-of-stock orders will be handed to you by the warehouse team. All orders are printed and an out-of-stock is not found until it has been attempted to be picked. With this being said the label will be handed to you. 

Once you have the label in your hand you can start the rest of the process. 

Open Shipstation to firstly void then cancel the label Click here

Once the label has been voided and canceled the order must now be refunded. This order is considered a fully shipped order as tracking has been generated. See this article for refunding orders that are fully shipped: Fully shipped cancelations