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Handle customer overpayments in QuickBooks Online

by Intuit•47• Updated 2 weeks ago

If a customer overpays, you can apply the credit to an invoice, give a refund, or enter the extra payment as a tip.

There are a few ways to handle credits in QuickBooks. Learn how to create a credit.

  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 the Amount received.
  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 or Cheque.
  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.
  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 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.
  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. Follow this link to complete the steps in product Open this link in a new window
  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. Follow this link to complete the steps in product Open this link in a new window
  2. Select Create invoice.
  3. Select Customer. In the Products/Services field, select the tip item you created in Step 2.
  4. Select Save and close. 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.

The customer’s overpayment is now correctly handled. Whether it’s credited or refunded, your books stay correct.

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.

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