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Level 1

Customer overpayment, refund and account receivable

A customer paid $200 on an invoice of $150 i.e. they overpaid $50 on the invoice. 

I sent them a check for $50.

Then followed the Refund Receipt workflow to record the payment of $50 to customer.

 

But the Accounts Receivables still show negative $50  (-$50) balance against that customer.

Since I already paid back to the customer, the Account Receivable should be zero'ed out.

 

How do I fix this? 

23 Comments
Highlighted
Level 9

Customer overpayment, refund and account receivable

1. Click on the plus (+) icon

2. Select Check or Expense under Vendors header

3. Select the customer from drop down that need refund

4. Go to Account under Account details = Accounts Receivable (A/R).

5. Enter the Amount = refund amount

6. Click on Save.

 

Refund receipts are often used when a customer credit card or ACH charge is rejected or returned and a bank feed deposit will need to be reduced by the amount "taken back", the refund receipt is posted to undeposited funds so that it can be included with other deposits.

Highlighted
Level 10

Customer overpayment, refund and account receivable


@somani_vivek wrote:

 

I sent them a check for $50.

Then followed the Refund Receipt workflow to record the payment of $50 to customer.

 

 


Did you match the Refund Receipt with the check in For Review? Or did you record the check separately?

Highlighted
Level 1

Customer overpayment, refund and account receivable

I am using Quickbooks online.

When I go to Expense screen, I do not see "Accounts Receivables" in the Payment Account drop down. 

Highlighted
Level 1

Customer overpayment, refund and account receivable

I sent the check outside of Quickbooks. 

When the debit bank transaction was pulled in automatically by QBO, I matched it with the refund receipt.

The bank balances match all fine, but I have the negative entry in the AR.

Highlighted
QuickBooks Team

Customer overpayment, refund and account receivable

Pleased to have you here, @somani_vivek.

 

To zero out your customer's balance and Accounts Receivables, let's create an expense transaction here's how:

 

  1. Click the Plus Icon (+).
  2. Go to Expense.
  3. Choose the name of the customer.
  4. Select the same bank account used in processing the refund.
  5. In the Category Details section, choose Accounts Receivables in the Category column.
  6. Enter the complete expense details.
  7. Click Save and Close

 

That should do it! For additional insights about processing customer's refund, you may check out these articles:

Please don't hesitate to visit us here in the Community if you have other questions about clearing out your customer's balance. I'm always here to help.

Highlighted
Level 10

Customer overpayment, refund and account receivable


@somani_vivek wrote:

I sent the check outside of Quickbooks. 

When the debit bank transaction was pulled in automatically by QBO, I matched it with the refund receipt.

The bank balances match all fine, but I have the negative entry in the AR.


Refund receipt is the wrong document. Delete it.

Create a check transaction and in the place where you normally enter what expense it is for select Accounts Receivable. 

Then to apply the open credit to this debit  create a zero Receive Payment and check them both off, so the net is zero. Save

Highlighted
Level 1

Customer overpayment, refund and account receivable

Thank you Malcolm!  I've been searching for hours on this.  All the other answers pointed me to the refund receipt mechanism.  Your answer actually made sense and worked!

Highlighted
Level 1

Customer overpayment, refund and account receivable

When you create the expense and then match it with the zero payment, what account to "deposit" the funds to? There has to be something chosen, even though it's not being deposited. Thanks!

Highlighted
Level 10

Customer overpayment, refund and account receivable


@helphomeschoolgr wrote:

When you create the expense and then match it with the zero payment, what account to "deposit" the funds to? There has to be something chosen, even though it's not being deposited. Thanks!


It 's not an expense. it's a Receive Payment. The "deposit" to doesn't matter. Just use the bank account

Highlighted
Level 1

Customer overpayment, refund and account receivable

That is what I meant, sorry for the confusion.  When I receive payment and match it to the expense I created there is still a deposit to field.  I can't just leave it blank.  Whatever "bank" I choose the money shows up there as an additional amount.  Maybe I am doing something wrong--created expense against A/R, then receive payment choosing that expense.  But the deposit to is creating a stumbling block for me.

Highlighted
Moderator

Customer overpayment, refund and account receivable

Hi there, @helphomeschoolgr.

 

I appreciate you getting back to us and for performing the steps provided on this thread. Allow me to chime in for a moment and share additional information about where to deposit the expense you've matched with zero payment.

 

As mentioned by @Malcolm Ziman, you can choose any bank on the deposit to field since you're just offsetting the unapplied payment (overpayment). To make sure that I'm on the same page, I'll appreciate if you can provide us a screenshot of the bank you're referring to the money that is showing as an additional amount.

 

I'm looking forward to your response, @helphomeschoolgr. Have a great weekend.

Highlighted
Level 10

Customer overpayment, refund and account receivable


@helphomeschoolgr wrote:

That is what I meant, sorry for the confusion.  When I receive payment and match it to the expense I created there is still a deposit to field.  I can't just leave it blank.  Whatever "bank" I choose the money shows up there as an additional amount.  Maybe I am doing something wrong--created expense against A/R, then receive payment choosing that expense.  But the deposit to is creating a stumbling block for me.


The total net amount or value of the Receive Payment s/be zero. There s/be 2 amounts checked off; a positive amount and the same amount as a negative, total = zero

Highlighted
Level 2

Customer overpayment, refund and account receivable

Hi This was really helpful.  And

I did my refund correctly.  

went into checks, put the customer name in, category= A/R and the refund amount. 

 

But when I go back into the customer's profile I now see $200 OVERDUE but 0.00 due in the transaction list? 

What did I do wrong? 

 

Screen Shot 2020-04-03 at 10.30.53 AM.png Screen Shot 2020-04-03 at 10.30.45 AM.png

Highlighted
QuickBooks Team

Customer overpayment, refund and account receivable

Thanks for getting back here in the Community, @michella.

 

There are two possible reasons you're seeing this Overdue amount. First is overpayments for the customers' refund.

 

Second,  Refund Receipt may have not been used when processing your refund. To do this, here's how:

 

  1. Click + New.
  2. Select Refund Receipt.
  3. Fill out all the necessary information.
  4. Hit Save and Close.

 

Also, to remove the Overdue amount, you'll have to create a Credit memo and make sure to link it to the check associated with the refund. Here's how to create a credit memo:

 

  1. Click + New.
  2. Select Credit Memo.
  3. Fill out all the necessary information.
  4. Hit Save and Close.

 

You can go back to your Accounts Receivable section to make sure everything is in place.

 

Check out this article to learn how to refund a credit card payment in QuickBooks Online: Refund a credit card payment in QuickBooks Online.

 

Feel free to share your thoughts or concerns here in the Community. I'll be around to back you up. Have a great day and take care always!

Highlighted
Level 2

Customer overpayment, refund and account receivable

Hi! 

Thank you for your quick reply.  

If I do a credit memo what do i put as the category? 

A/R? 

Highlighted
Level 2

Customer overpayment, refund and account receivable

I tried the credit memo and the refund receipt, each time it adds 200 to the amount due. 

 

I do not know how to apply the credit memo to the invoice. maybe that is it?  how can i do that? 

 

Screen Shot 2020-04-03 at 1.38.44 PM.png Screen Shot 2020-04-03 at 1.38.50 PM.png Screen Shot 2020-04-03 at 1.38.59 PM.png

Highlighted
Moderator

Customer overpayment, refund and account receivable

Hey there, @michella. Thanks for touching base with us again.

 

I recommend consulting with your accountant to find out which category to use, as every business is different and uses different categories. Your accountant will have the knowledge and expertise to make the appropriate recommendations for this.

 

In regards to applying the credit memo to an invoice, you can do so by following these steps:

 

  1. Click Sales from the left pane.
  2. Select Customers and click the customer’s name.
  3. Locate the invoice you want to apply the credit to and click Receive Payment.
  4. Enter the necessary information on the Receive Payment window.
  5. In the Outstanding Transactions section, make sure that the correct invoice is selected.
  6. Click Save and close.

 

The steps above will help you apply the credit to your customer’s open invoices. For your reference, you may check out this article: Apply a credit memo, credit or refund to a customer.

 

Let me know if you have any other questions, I'm here to help. Have a wonderful evening!

Highlighted
Level 2

Customer overpayment, refund and account receivable

Hi, Thank you again! 

however, the invoice is already closed.  the customer made an overpayment in excess of 200.  

so there is no payment to be received in the original invoice. 

 

Should I just start another invoice for 200? and receive the payment for that? 

Highlighted
QuickBooks Team

Customer overpayment, refund and account receivable

Hi @michella,

 

Yes, you can apply the credit to your next invoice. Let me guide how.

 

  1. Create an invoice by going to + New, then Invoice.
  2. Enter the invoice information. Hit Save and close.
  3. Go to + New, then Receive payment and mark the invoice.
  4. Scroll down towards the Credits section and select the credit memo.
  5. Hit Save and close.

Please see this article for more information about: Enter and apply credit memos and delayed credits in QuickBooks Online. You'll also know how to automatically apply credit memos to your invoices in the attached article.

 

I'm attaching our page about payments for additional resources.

 

Reach out to us anytime if you have other questions or concerns. The Community is here to help. Thanks for posting and have a wonderful day.

Highlighted
Level 2

Customer overpayment, refund and account receivable

HI Sheila, 

 

Thank you for that, however there will not be more work and thus another invoice needed. 

I wanted to clarify my question -since the credit needs to be applied to something what do i apply it to? 

how can i get rid of the excess of 200 in my clients account. 

Please see pictures below: 

 

Thank you! 

 

Screen Shot 2020-04-03 at 10.30.45 AM.png Screen Shot 2020-04-03 at 1.38.50 PM.png

Highlighted
QuickBooks Team

Customer overpayment, refund and account receivable

I can definitely help you with this, michella.

 

QuickBooks Online offers 3 ways of handling customer overpayments. The first method is applying the credit to an invoice which is not applicable in your case. The second one is recording it as a refund. In this process, we can use a check or expense to record the refund that will reduce your bank's balance and offset your customer's open credit. Check out the steps that I've listed below.

 

First, we'll have to record the refund for your customer:

 

  1. Click the + New icon.
  2. Select Expense oCheck
  3. Select the customer you want to refund from the Payee ▼ drop-down.
  4. From the Payment account ▼ drop-down, select the bank account where you deposited the overpayment.
  5. On the first line of the Category column, select an Accounts Receivable.
  6. Enter how much you want to refund in the Amount field.
  7. Fill out the other required fields.
  8. Hit Save and close.

Then, let's link the refund to the customer's credit:

 

  1. Click the + New icon.
  2. Select Receive payment or Receive invoice payment.
  3. Choose the same customer you used for the check or expense.
  4. Fill out the required fields.
  5. Under the Outstanding Transaction section, select the checkbox for the Expense or Check you created.
  6. Click Save and close to complete the process.

The last option in handling a customer overpayment is recording it as a tip. However, this is only used if your customer paid more than their total on purpose. You can refer to this article to learn more about this process: Record an invoice overpayment as a tip.

 

In case you want to track all the refund receipts that you've processed for the year. you can follow these steps in customizing the Transaction List by Customer report:
 

  1. Select Reports from the sidebar menu, then enter Transaction List by Customer on the search bar.
  2. Click the Customize button.
  3. Select the appropriate reporting period.
  4. Under Filter, select Refund from the Transaction Type drop-down menu.
  5. You can choose a specific customer from the Customer drop-down menu, then Run report.

Do you any other questions in mind? Feel free to leave them below and I'll make sure to get back to you as quickly as I can. Have a great rest of the day michella!

Highlighted
Level 1

Customer overpayment, refund and account receivable

I've been doing this but on a particular transaction my statement of activity report is now showing a -200 in unapplied cash payments. I've done several refunds and this is the only one doing that. Help.

Highlighted
Moderator

Customer overpayment, refund and account receivable

I appreciate you following this thread, alaskamissions.

 

Let me add information regarding unapplied cash payments in QuickBooks Online. If you report on a cash basis accounting method, you may see two accounts for unapplied cash payments. These accounts are default and automatically created by QuickBooks for cash-basis reporting and we're unable to delete or change it.

 

The purpose of this account is to report cash basis income from customer payments that are accepted but not used to any sales form. Usually, the date of the payment is before the invoice date it's applied to. To make sure this account won't show, you may need to ensure that the invoice date and the date of the payment applied are the same.

 

For more details, check out our detailed guide on What's Unapplied Cash Payment?

 

I'm also adding some helpful articles about categorizing and receiving invoice payment and on how :

 

Feel free to let us know if you have other questions.

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