Excess payments from customers

@pam1308 

You may know this already, but you need to leave the overpayments as a negative A/R in order to apply it to a customer's invoice.  That is just how QB works.  Yes, technically the overpayment is a liability but once you create a journal entry and move it from A/R to a liability account, you lose the ability to apply it to an outstanding invoice.   

I'll help clear things up for you about customer overpayments in QuickBooks Online (QBO), pam1308. 

I agree with the provided insights above about handling overpayments to a customer's invoices. 

Also, the way you deal with a customer's overpayment depends on what he wants to do with it. You have three options on how you can handle the overpayment:

• Apply the credit to an old invoice or future invoices
• Refund the customer
• Record the overpayment as a tip 
   

Here's how: 

1. Go to the + New menu, then select Receive payment.
2. Choose the customer in question, then the credit note and the invoice.
3. Tick the box of another pending invoice where you want to apply the credit note. Enter the overpayment amount in its Payment column.
4. Hit Save and close.

Or, use it on a new invoice:

1. Move to the + New menu, then select Invoice.
2. Proceed with creating the invoice, then press Save.
3. Click the Receive payment button.
4. Tick the box for the credit note in question then hit Save and close.

You can also set up customer credits to apply to future payments automatically.

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

Additional information about this process is in this article: Handle a customer credit or overpayment in QuickBooks Online. 

Here's an article that may come in handy in the future for your business: 

• Run an accounts receivable aging report
• Record invoice payments in QuickBooks Online 

Do you have other questions about invoices and overpayments? Please let me know by leaving a reply. I'll be here more than happy to assist you.

Good morning!   We had a customer overpay way back in May of 2020.  I was not employed here at that time.  It is showing as a negative in the A/R aging report.  I am unable to apply the amount to a current invoice and can't seem to find the steps to take to do so.  We are using QB desktop version.  Any help you could give would be appreciated!  

Hi there, @LN74.

I'm here to address your concern about how you can handle overpayment in QuickBooks Desktop (QBDT) seamlessly.

You can remove the negative balance by creating a credit and applying it on an invoice.

Here's how:

1. Go to the Customers menu.
2. Select Create Credit Memos/Refunds.
3. Choose your customer from the Customer: Job drop-down.
4. Enter the products you're giving them credit for, then select Save & Close.
5. Pick Retain as an available credit for the prompt message.

Furthermore, in case you want to refund your customer for their overpayment, you can refer to the steps outlined in this article: Give your customer a credit or refund in QuickBooks Desktop for Windows.

Once done, you can now review the A/R Aging report to double-check if the deposit with a negative amount already removed.

I'm also adding some articles below to view various ways you can track customer transactions in QBDT. Then, how Accounts Payable is used to track the money you owe your vendors and how it works.

• Accounts Receivable workflows in QuickBooks Desktop
• Accounts Payable workflows in QuickBooks Desktop

Do you have other questions about invoices and overpayments? Please let me know by leaving a reply. I'll be here more than happy to assist you. Have a grate day ahead!

Can you give brief explanation about this solution please?   

Can you give brief explanation about this?

Hello Anjali. Thanks for chiming in on this thread. To make sure I'm on the same page as you, could you highlight exactly where you need more clarity in regards to the explanation provided above?

I need more clearity about journals.like how we should journals because i did but it doesn't work.

I need more explaination about journal. How we can do it? Because i did but might be somting wrong.

Are you looking for ways on how to enter a journal entry? If so, what happens when you try to do that on your end? 

After journal completed i found that account has still negative balance and create another overdue.

I see. In order to make sure your journal entry is enter correctly, I recommend reaching out to an accounting professional for expert advice on this. If you're not in contact with a professional, don't worry, you can search for one using this link here. Feel free to keep us posted on how you make out. I'll be one message away.

thank you

i used the overpayment on customer invoices but now i need to reverse it and i deleted the payment but the credits aren't showing back on his account.

what do i do? this is an emergency....   help!!

Hello, @MB1212.

Let me help you go over your invoice and have that payment reversed and show it to the account.

Since you've mentioned that you reverse and deleted the payment. Normally, the invoice will open. We can review the transaction and ensure that you've successfully deleted the payment. 

If the deletion of the payment is not successful, you may turn off the auto-apply credits and then delete the payment.

QBO
 

1. Go to Settings ⚙, then select Account and settings.
2. Select Advanced tab.
3. Select Edit ✎ in the Automation section.
4. Turn on Automatically apply credits if you want to automatically apply credit memos to customers balances or open invoices. Turn it off if you want to decide which open invoices you want to apply credit memos to.
5. Select Save, then Done.

QBDT
 

1. Launch QuickBooks Desktop on your computer and log in to your company file.
2. Go to Preference and click "Edit" and then select "Preferences."
3. Choose payments
4. Access the Company Preferences: Within the Payments section, click on the "Company Preferences" tab.
5. Adjust Credit Options: Under the Company Preferences tab, you should see a section related to "Automatically Apply Payments." If you want to turn off automatic credit application, uncheck the box next to Automatically apply payments.
6. Save Changes Once you've made the desired changes, click the "OK" button at the bottom of the Preferences window to save your settings.

I'm adding this article for more guidance: Void or delete transactions in QuickBooks Online.

I'm also adding some articles below to view various ways you can track customer transactions in QBDT. Then, how Accounts Payable is used to track the money you owe your vendors and how it works.

• Accounts Receivable workflows in QuickBooks Desktop
• Accounts Payable workflows in QuickBooks Desktop

Do you have other questions about invoices and overpayments? Please let me know by leaving a reply. I'll be here more than happy to assist you. Have a great day ahead!

We have 2 large overpayments that are showing as negative amounts as well as invoices that are open for this customer.  How do I apply the credit to multiple invoices so that we can clean up our A/R Report?

You've come to the right place, @Khawk01. I'm here to help you apply the credit to multiple invoices in QuickBooks Online and clean up your Accounts Receivable (A/R) report.

You can follow these steps:

1. Click the + New button.
2. Under the Customers tab, choose Receive Payment.
3. Select the customer at the Choose a customer drop-down menu (upper left corner).
4. Scroll down to the Outstanding Transactions section.
5. Select the open transaction you want the credit to be applied.
6. Manually enter the overpayment amount in the Payment column (right corner).
7. Scroll down to the Credits section.
8. Repeat steps 5 to 6.
9. Hit Save and new or Save and close.

Additionally, you can apply overpayments as a refund or record it as a tip. You can refer to these articles for more info:

• Handle a customer credit or overpayment in QuickBooks Online
• Record a customer refund in QuickBooks Online

If you have further concerns about overpayments, please don't hesitate to reach out to the Community again. More power to you and your business!