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dLearned
Level 4

credit memo creation

If a customer overpays an invoice, is there a way for Quickbooks to automatically create a credit memo for the balance?  So, for example, I have a customer payment for $500.  Customer has 4 invoices for $100 each.  I enter the payment amount, select the 4 invoices and there is $100 left over and I want to issue a credit memo for the overpayment.  Is there a way to do this automatically (or at least launch the memo screen)?

Solved
Best answer July 15, 2021

Best Answers
MaryLandT
Moderator

credit memo creation

Yes, you don't need to create a credit memo since QuickBooks will record the balance as a negative amount, dLearned.

 

You can use the balance for the next invoice. If you want to automatically apply the overpayment to future invoices, you can tell QuickBooks to automatically use it.

 

Let me show you how:

 

  1. Go to Settings ⚙ and select Account and settings.
  2. Proceed to the Advanced tab.
  3. Click Edit ✎ in the Automation section.
  4. Mark Automatically apply credits.
  5. Select Save, then Done.

 

Some customers prefer getting a credit they can use to reduce the balance on their next invoice. If they simply want a refund, here's how to return their payment.

 

Stay in touch with me if you more help with managing customer's overpayments. I'm always right here to help you.

View solution in original post

5 Comments 5
ChristieAnn
QuickBooks Team

credit memo creation

Hi there, dLearned.

 

Welcome back to the QuickBooks Community. I'll share details on how customer's credits or to handle overpayments in QuickBooks Online.

 

Once the customer overpays more than what was owed, you can enter a credit memo, refund the customer, or enter the overpayment as a tip in QuickBooks. Since the customer pays you $500 and the invoices to be paid are only $400, there's no option to automatically issue a credit memo for $100 in QuickBooks Online. Meanwhile, you can enter the full amount of $500 in the receive payment window and choose the four invoices that cost $100 each. This way, it will automatically create a credit to the customer's profile that you can apply for future invoices. 

 

I've attached a screenshot below for visual reference:

 

 

 

 

You can click this article to see detailed steps on how you can apply the available credit to customers' balances or open invoices: Create and apply credit memos or delayed credits in QuickBooks Online.

 

I'm also adding this article to see various information on how you can refund the customer or record the overpayment as a tip-in QBO: Handle a customer credit or overpayment in QuickBooks Online.

 

Keep me posted on how it goes or if you need additional help. I'll keep an eye on your reply. I'd like to make sure this is taken care of.

dLearned
Level 4

credit memo creation

Thank you for your reply.  Just so I am clear, if I do as described, there would be a $100 "amount to credit" left over (which I suspected).  Now do I HAVE to create a credit (memo or delayed credit)?  If I don't do that extra step, does this extra money display on a customer statement or balance?

Adrian_A
Moderator

credit memo creation

Hi there, dLearned.

 

Not entering a credit memo will not display a balance on your customer's statement. That said, you'll have to enter the transaction amounting to $100 as stated by my colleague.

 

You can click this article to see detailed steps: Create and apply credit memos or delayed credits in QuickBooks Online.

 

Don't hesitate to reach out to me if ever you needed help.

dLearned
Level 4

credit memo creation

Thank you!  So then one last point of clarification.  If, instead of the scenario stated, what if the customer overpaid an invoice.

So we have a customer that paid (according to the check stub) for an invoice that didn't exist.  I did as suggested above, and created a credit memo for the excess amount.  The same customer, on a second check, overpaid an invoice (paid $7500 instead of $75.00).  I have paid the invoice exactly as they indicated, and the invoice now shows a balance of $-7425.  In this case, am I correct in assuming that this balance (because it is attached to an actual invoice) will display on the customer statement as a negative amount?  And if so, it can be "paid" and in effect applied to other invoices? If so, there would be no need to create a credit memo or anything else, correct?

MaryLandT
Moderator

credit memo creation

Yes, you don't need to create a credit memo since QuickBooks will record the balance as a negative amount, dLearned.

 

You can use the balance for the next invoice. If you want to automatically apply the overpayment to future invoices, you can tell QuickBooks to automatically use it.

 

Let me show you how:

 

  1. Go to Settings ⚙ and select Account and settings.
  2. Proceed to the Advanced tab.
  3. Click Edit ✎ in the Automation section.
  4. Mark Automatically apply credits.
  5. Select Save, then Done.

 

Some customers prefer getting a credit they can use to reduce the balance on their next invoice. If they simply want a refund, here's how to return their payment.

 

Stay in touch with me if you more help with managing customer's overpayments. I'm always right here to help you.

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