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Handle customer overpayments in QuickBooks Online

SOLVED•by QuickBooks•39•Updated 6 days 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.

  1. Select + New.
  2. Select Receive payment.
  3. Select the customer, then the credit and the invoice.
  4. Select another pending invoice and enter the overpayment amount in its Payment column.
  5. Select Save and new or Save and close.
  1. Select + New.
  2. Select Invoice.
  3. Create the invoice.
  4. Select + New. Then select Receive payment.
  5. Select the credit and then Save and new or Save and close.

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

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

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:

  1. Select + New.
  2. Select Expense, Add expense or Cheque. If you're in Business view, follow the steps to switch to Accountant view first. Then come back to these steps.
  3. Select the customer you want to refund from the Payee ▼ dropdown.
  4. From the Payment account ▼ dropdown, select the bank account where you deposited the overpayment to.
  5. On the first line of the Category column, select Accounts Receivable.
  6. Enter how much you want to refund in the Amount field.
  7. Fill out the other fields as you see fit, then select Save and close
  1. Select + New.
  2. Select Receive payment.
  3. Select the same customer you used for the cheque or expense when recording the refund.
  4. Fill out the other fields as you see fit.
  5. Under the Outstanding Transaction section, select the checkbox 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.
  6. Make sure the payment is equal to the open balance, then select Save and close.

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

  1. Go to Settings ⚙ and select Chart of accounts.
  2. Select New.
  3. For Account Type, select Other Income.
  4. For Detail Type, select Other Miscellaneous Income.
  5. Enter a Name, like "Tip Revenue" and select Save and Close.
  1. Go to Sales and select Products & services (Take me there).
  2. Select New, then Non-inventory.
  3. Enter a Name, like "Tips."
  4. For Income account, select the account you created in Step 1.
  5. Select Save and close.
  1. Go to Sales and select Invoices (Take me there).
  2. Select Create invoice.
  3. Enter the Customer. In the Products/Services field, select the tip item you created in Step 2.
  4. Select Save. If your credits are set up to apply automatically, you're done. Otherwise, select Receive payment.
  5. Select the credit and then Save and close.

We're here to help

If you need additional help or have questions, or you require assistance at any point in this process, our Customer Success team is happy to help.

Sign in to QuickBooks and start a discussion in our QuickBooks Community or join one of our Facebook Groups to connect with other like-minded QuickBooks customers. 

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