Correct way to record a supplier credit resulting from overpayment on a vendor payment

enter a credit memo for the vendor, if the original bill used an expense account you can use that same account for the credit memo, other wise use other income

So record the bills twice, make the payment as if these were two separate invoices and record the credit memo.

If i enter the bill just once and pass the actual overpayment made without selecting any bill for the overpayment, that creates a credit in itself on QBO. If i then create another vendor credit, there are two credits on the system. Am i missing something here ?

Thanks for getting back to us, NainaG.

If the payment recorded is more than the amount of the bill, you don't need to create another vendor credit. QuickBooks will show an unapplied credit. The next time you make a bill payment, you'll see the Unapplied Payment under Credits.

I've added a sample screenshot for your reference. 

Please let me know if you have any additional questions about QuickBooks. 

How is the duplicate payment recorded? We have paid our vendor for one bill on 2 checks, so it is not just an overpayment on a single check. Vendor Credit doesn't seem to be the answer since that doesn't actually book a decrease in my cash account. I need to show the 2 payments for my bank account to reconcile. Thank you!

Let's get everything recorded, brinicole42.

We can create another check for that duplicate payment to your vendor. We just need to ensure that we can use it on your future bills for the said vendor. Here's how to do it:

1. Click the + New button in the upper-left corner and select Check.
2. Enter the vendor name in the Payee field and select the affected Bank Account.
3. Enter the Payment date on when the duplicate payment happened.
4. Go to the Category details section and select Accounts Payable in the CATEGORY column.
5. Enter the Amount and the details. You can add a description if necessary.
6. Click Save and close.

This will serve as credit on your vendor's profile. Also, you can apply it as payment on your future bills of the vendor. You can also use this link for reference: How to enter outstanding balances for customers and vendors.

From there, you can start reconciling the account.

We'll be right here if you need additional assistance with this. Have a great day!

I'm using QB 2021 desktop. I cannot find the answer I need anywhere online, and I've been looking for a long time.

We paid our garagekeepers insurance online a couple of months ago and entered it as a check (not a bill). Today we got a refund check for $6.18 (and for all the hassle, I wish they'd have kept it). I need to know how to get the refund check into QB's undeposited funds and all I can find is the Make Deposits/ Enter a Credit Memo/ zero it out through Pay Bills method. 

In none of these steps can I make it show up when I do my next bank deposit. What am I missing -- or is this another example of QB's inability to handle things? Thanks for ANY help!

Hey there, @AmericanRV. 

Thanks for joining in on this thread. Let me point you in the right direction to get this fixed as soon as possible. 

To clarify, have you tried the third scenario in this guide listed below? 

Record a vendor refund in QuickBooks Desktop

Based on the information you gave, those instructions will be the best to use for your business. 

Keep me updated on how it goes. It's my priority that you're able to get back to running your business. Have a wonderful day! 

Thank you -- yes, I've tried that step and others. I've used that method many times over the years and it works fine if it's a credit the vendor is going to carry.

What I need to know is, how do I enter that refund check I received and have it show in UNDEPOSITED FUNDS, so when I do  my next deposit it's included? When I use method 3 I can't enter the refund check as going into Undeposited Funds (when I try I get the message "You cannot make a deposit into Undeposited Funds. Choose a bank or asset account.")

If I do it using Method 3, it simply zeros it out so there's no outstanding credit. It doesn't allow me to show the check still undeposited.

It doesn't make sense that I'll just have to remember to include that refund check when I make the next deposit, does it? Thank you so much for ANY insight you can give me. 

Thanks for coming back for more support, @AmericanRV. The Undeposited Funds account in QuickBooks holds customer payments until they are deposited at your physical bank. 

Hence, you'll have to deposit it to your bank account first so it will show to combine these payments into a single record in QuickBooks to ensure that your bank records are matched.

Check out this link for additional insights about how the Undeposited Funds account works in QuickBooks Desktop. 

Feel free to message again if you have additional concerns about posting refund checks. Take care!

I really appreciate all your help! I do know how undeposited funds works, it's where I put all cash and checks we receive in payment from customers.

Unfortunately, it sounds like there may not be a way to get this insurance refund check into undeposited funds as a "prompt" to add it to my next deposit. I guess I'll just have to remember it exists, and manually add it when I make the next deposit.

But thank you for all your efforts to help!

Hey, 

I, like yourself, am a perfectionist and hate to see the negatives instead of it all showing zero. 

The work around for this that I found (and anyone can correct me if this is wrong) is to make the "deposit" as a journal entry instead. 

Here's what my situation was:
An invoice got overpaid by $66.00 
The payment entered as usual in QuickBooks, payment was applied to the invoice, and the remainder of the money send was left as a credit on the account. 

**If I followed the steps outlined in the QuickBooks help guide it would then show a -$132.00 on the total column in the supplier account.**
When the vendor sent us the $66.00 back (mine was an etransfer so different than you needing to deposit a cheque) I made a journal entry, debiting our bank account and crediting the accounts payable account with the "name" as the vendor name

I then went in to the "+new" "pay bills" section, found the vendor and the amount and applied it. 

This now shows the journal entry as a positive, to go against the "negative" (payment) in the supplier's account. Both the balance column and total column now equal zero. When I go and look at the accounts payable report the balance is showing as zero. 

Let me know if that helped! 

I've done the steps as outlined and my vendor account is correct and my bank account is correct.  However, I see the refund (for paying an invoice twice) from the vendor now as "unapplied cash bill payment".  How do I clear that?

Thanks for joining this thread, EggBend412.

I'd like to ensure we're on the same page, so I can provide you with the correct information about handling vendor credits in QuickBooks Online.

What set of steps above did you follow? What are the transactions you've recorded in your QBO account? Any further details could help us give the best resolution to your concern.

It would also be great if you could include some screenshots so I can better understand it.

I'd appreciate any additional details you can provide. I'll be keeping an eye out for your response on this.