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Handle customer overpayments in QuickBooks Online

by Intuit•21• Updated 2 months ago

Customers can pay you too much for several reasons. When this happens, you can use the credit toward an invoice, refund the customer, or enter the overpayment as a tip in QuickBooks.

Create a customer credit

If a customer pays you and you don't have any outstanding invoices, you can save the payment as a credit for later.

Go to Sales and select Customers.
Select the customer you want to assign the credit to.
From the New transaction ▼ dropdown menu, select Payment.
Fill out all required information.
Select Save and Close.
A warning message will appear: "You didn’t select any invoices”. Then select Save as a credit.
Go to Transactions and select Bank transactions.
Match the payment with the credit created previously.

Option 1: Apply the credit to an invoice

Apply the credit to an invoice you've already created

Select + New.
Select Receive payment.
Select the Customer, then the credit and the invoice.
Select another pending invoice and enter the overpayment amount in the Amount received.
Select Save and new or Save and close.

Apply the credit to a new invoice

Select + New.
Select Invoice.
Create the invoice.
Select + New. Then select Receive payment.
Select the credit and then Save and new or Save and close.

Tip: Set up customer credits to apply to future payments by default.

Go to Settings ⚙ and select Account and settings.
Select Advanced.
In the Automation section, select Edit, and select Automatically apply credits.

Option 2: Refund the customer for the overpayment

You can record a refund to your customer using Cheque or Expense if:

They want to redeem their open credits.
They made a prepayment for an order but cancelled it before receiving the goods or services.
They want you to reimburse an accidental overpayment.

Using Cheque or Expense to record the refund reduces your bank's balance and offsets the customer's open credit, overpayment, or prepayment.

Follow these steps to complete this action:

Step 1: Record the refund for your customer

Select + New.
Select Expense or Cheque.
Select the customer you want to refund from the Payee ▼ dropdown.
From the Payment account ▼ dropdown, select the bank account where you deposited the overpayment.
On the first line of the Category column, select Accounts Receivable.
Enter how much you want to refund in the Amount field.
Fill out the other fields as you see fit, then select Save and close.

Step 2: Link the refund to the customer overpayment

Select + New.
Select Receive payment.
Select the same customer you used for the cheque or expense when recording the refund.
Fill out the other fields as you see fit.
Under the Outstanding Transactions section, tick the box for the Expense or Cheque you created when recording the refund.
Note: If you have automation to apply bill payments turned on, this step is done for you.
Make sure the payment is equal to the open balance, then select Save and close.

Option 3: Record the overpayment as a tip

If your customer paid more than their total on purpose, you can record it as a tip.

Step 1: Add an income account to track tips

Go to Settings ⚙ and select Chart of accounts.
Select New.
For Account Type, select Other income.
For Detail Type, select Other Miscellaneous Income.
Enter a Name, like "Tip Revenue" and select Save and Close.

Step 2: Create a tip item

Go to Sales and select Products & services (Take me there).
Select New, then Non-inventory.
Enter a Name, like "Tips."
For Income account, select the account you created in Step 1.
Select Save and close.

Step 3: Record the extra money as a tip

Go to Sales and select Invoices (Take me there).
Select Create invoice.
Select Customer. In the Products/Services field, select the tip item you created in Step 2.
Select Save and close. If your credits are set up to apply automatically, you're done. Otherwise, select Receive payment.
Select the credit and then Save and close.

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Handle customer overpayments in QuickBooks Online

by Intuit•21• Updated 2 months ago

Create a customer credit

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