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Super Explorer ***

How to categorize Overpayment to Vendor/vendor Credit

We accidentally paid a vendor twice for the same service.

 

1) I figured I can create a vendor credit and match the banking transaction to that credit and then apply the credit to pay a future bill. 

 

2) What category should I choose for the credit? 

 

To be clear, the vendor did not send us a refund. We simply overpaid him. Am I approaching this the right way? And what's the way to handle #2 above?

 

Thanks so much

3 Comments
QuickBooks Team

Re: How to categorize Overpayment to Vendor/vendor Credit

Hello there, @haskenazi1 

 

Thanks for choosing Intuit QuickBooks. I can share some insights about vendor credits in QuickBooks Online.

 

You're correct. Overpaying a vendor may lead to a vendor credit in QBO. You can use that credit to pay for the future transaction with your vendor.

 

Moreover, you'll have to make sure that the vendor credit is entered in QBO and apply it to a bill right before you can match it your downloaded transactions.

 

Your situation is the same for scenario 2 on the Manage vendor credits article. You can follow the steps below on how to enter the vendor credit and pay the future bill using it.

 

How to enter the vendor credit:

  1. On the top menu, select the Plus Icon (+).
  2. Choose Vendor Credit.
  3. In the Choose a vendor field, select the appropriate vendor name.
  4. Enter the necessary information.
  5. Select Save and new or Save and close.
    1.PNG

Next, pay the bill using the credit:

  1. On the top menu, select the Plus Icon (+).
  2. Choose Expense or Check.
  3. In the Choose a payee drop-down, select the vendor name.
  4. Leave the Reference / Check #, Date, Amount and Memo fields blank.
  5. From the Add to Check section, select Add for the outstanding bill and vendor credit.
  6. Select Save and new or Save and close.
    2.PNG

After recording the transactions, you should be able to match it to your online banking transactions.

 

Let me know how it goes, @haskenazi1. Please remember I'm here anytime you have additional questions or concerns with QuickBooks Online. You can reach out by posting a response below. Wishing you all the best!

Super Explorer ***

Re: How to categorize Overpayment to Vendor/vendor Credit

Thank you for your answer but I am still missing the answer to the question "which category/item do I choose within the vendor credit screen".

 

To summarize:

1) I paid a vendor twice for the same service. So one payment was matched to the bill. The other is still in my transactions register waiting to be matched to a vendor credit. 

2) I haven't yet created the vendor credit bc I am not sure which category/item to use

 

Thanks

Moderator

Re: How to categorize Overpayment to Vendor/vendor Credit

Allow me to jump in, haskenazi1.

 

You can choose Accounts Payable using an expense transaction. Let me provide further explanation.

 

Once you're done creating an expense, you can apply this transaction to a future bill, or create deposit under Accounts Payable if the vendor refund the overpayment to your account.

 

To create an expense:

  1. Click on the Plus (+) icon and choose Expense.
  2. Select the vendor from the Payee drop down and bank account.
  3. Set the date.
  4. Choose Accounts Payable under the Category column. 
  5. Enter the amount.
  6. The, click on Save and close.

Then, follow these steps to apply the expense to the bill:

  1. Go to the Plus (+) icon and choose Bill.
  2. Select the vendor.
  3. Fill in the Category details section and click on Save.
  4. Make a payment and link the bill to the expense transactions.
  5. Click on Save and close.

I've attached a screenshot below, so you'll know what I'm referring to.

 

Bill.PNG

 

For more information about recording deposits in QuickBooks Online (QBO), refer to this article: Record and Manage Bank Deposits.

 

Let me know how it goes by leaving a comment. I'll be here to keep helping.

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