Overpayment of Invoice from Customer on QB Desktop Enterprise

Trudye · ‎February 17, 2023

Here's the scenario:

1. Invoice created and sent to John Smith, LLC for $100

2. John Smith,LLC pays me $150

3. John Smith, LLC says that we can keep the extra $50 for a future invoice

This is where I am not sure the next steps.

In Option 1:
1. Make receive payment for $100.

2. Make Credit Memo to Client for $50

Problem: When the I go to make a deposit - I cannot attach a credit memo, so it will only attach the $100. How do I match to the other $50?

In Option 2:

1. Make Receive Payment for $150.

2. Match to the Deposit of $150

3. It allows me to save the extra $50 as a credit

Problem: It is showing a negative $50 in my A/R on cash basis.

How would I make sure that I have the credit for a future invoice - if that invoice is not created for a year, and also not have negative A/R showing up on my Balance Sheet in Cash Basis?

JamesAndrewM · ‎February 17, 2023

Thanks for getting back to the thread, @Trudye.

I'll conform with others and share information that could help clarify things for you.

To help you properly handle an overpayment from a customer in QuickBooks Desktop Enterprise, you could follow these steps:

Option 1: Create a Credit Memo

Make a Receive Payment transaction for the full amount of $150.
Create a Credit Memo for $50 for John Smith, LLC, and save it.
When you go to make a deposit, you can add both the payment of $100 and the credit memo of $50 to the deposit. This will result in a deposit of $150 in your bank account.

Option 2: Apply the Overpayment to Future Invoices

Make a Receive Payment transaction for the full amount of $150.
In the Receive Payment window, under "Outstanding Transactions," select the original invoice for $100 and apply the payment to it.
Create an invoice for John Smith, LLC for $50 (you can use the same customer account and job name). Save and close the invoice.
The $50 overpayment will now be shown as a credit on the customer's account, which can be applied to future invoices when they are created.

Furthermore, the A/R is negative because it is a balance that will be cleared if applied to an invoice.

You may visit this article for tips about handling your QBDT reports: Customize reports in QuickBooks Desktop.

Please don't hesitate to reach out to us if you need assistance with QuickBooks-related concerns. Have a nice day!

View solution in original post

GlinetteC · ‎February 17, 2023

Hello there, Trudye. Thank you for sharing detailed information about your overpayment issue. I'm here to lend a hand on how QuickBooks handles this.

QuickBooks Desktop will ask if you want to retain the credit or refund the customer. The overpayment is negative A/R which is why it's showing negative on your balance sheet. If you choose to leave the credit for future use, here are the steps you can perform:

From the Customers menu, select Receive Payments.
Under the Received from drop-down, choose your customer.
Then, select the Discounts and Credits icon.
On the Credits tab, check the credit you want to apply and then Done.
You may see a prompt to Confirm the transfer. If you do, select Yes. The amount will be applied automatically to the invoice.
Select Save & Close.

However, if you choose to refund a customer, please follow the process below:

Select Customers from the top menu bar.
Choose select Receive Payments.
From the Received from drop-down menu, enter the appropriate customer.
Click the Discounts and Credits icon.
In the Available Credits section, select the check you created, then hit Done.
If you'll be prompted to confirm the transfer, select Yes.
When you're done, click Save & Close.

To learn more about the process, read this article: Give your customer a credit or refund.

I also encourage visiting our Customer Transaction Workflow Guide to help track your sales and receivables in QuickBooks Desktop.

If I can be of any assistance, please don't hesitate to visit this thread again. I'll be right here to assist you again.

Trudye · ‎February 17, 2023

Ok - so with the example - when they pay me..

I am supposed to receive payment for 150, and then second step is follow your list to make a credit memo?

Because I am not able to do a normal receive payment for 100 and then your steps for 50 and have it match to the bank deposit I make in QB.

JamesAndrewM · ‎February 17, 2023

Thanks for getting back to the thread, @Trudye.

I'll conform with others and share information that could help clarify things for you.

To help you properly handle an overpayment from a customer in QuickBooks Desktop Enterprise, you could follow these steps:

Option 1: Create a Credit Memo

Make a Receive Payment transaction for the full amount of $150.
Create a Credit Memo for $50 for John Smith, LLC, and save it.
When you go to make a deposit, you can add both the payment of $100 and the credit memo of $50 to the deposit. This will result in a deposit of $150 in your bank account.

Option 2: Apply the Overpayment to Future Invoices

Make a Receive Payment transaction for the full amount of $150.
In the Receive Payment window, under "Outstanding Transactions," select the original invoice for $100 and apply the payment to it.
Create an invoice for John Smith, LLC for $50 (you can use the same customer account and job name). Save and close the invoice.
The $50 overpayment will now be shown as a credit on the customer's account, which can be applied to future invoices when they are created.

Furthermore, the A/R is negative because it is a balance that will be cleared if applied to an invoice.

You may visit this article for tips about handling your QBDT reports: Customize reports in QuickBooks Desktop.

Please don't hesitate to reach out to us if you need assistance with QuickBooks-related concerns. Have a nice day!

jennifervincent_aimpa · ‎August 22, 2023

I have a similar situation with an older transaction.

Invoice was $100, payment $125.

I created a credit memo and generated a check for the credit memo.

Now, the customer account shows a negative balance of 25. The check did not zero the credit memo.

I'm not sure how to resolve the balance? Thank you, Jennifer

Archie_B · ‎August 22, 2023

Hi there, jennifer.

I can share some info to properly handle customers' overpayment and resolve the balance issue in QuickBooks Desktop.

Since you've already recorded a $125 invoice payment, you don't need to create a credit memo to match it with a refund check. If you've already created the check and credit memo, you can delete them and process a refund check directly through the invoice payment. This will allow you to link the refund check to the payment and resolve the balance issue.

Here's how:

Go to the Customers menu at the top, then choose Customer Center.
Select the Customer, then look for the payment you recorded.
Open the invoice payment.
Under the OVERPAYMENT section, tick the option REFUND THE AMOUNT TO THE CUSTOMER.
Then, hit Save & close.
Confirm the changes by clicking Yes.
Review and complete the details for the refund, then select OK button.

I've added this article for more information about creating a credit memo or refund check in QuickBooks Desktop: Give your customer a credit or refund in QuickBooks Desktop for Windows.

If you also need to void or refund a customer payment, use this link as a reference: Void or refund customer payments in QuickBooks Desktop.

Don't hesitate to leave a comment below for any follow-up questions about customer payments and invoices. I'll always do my best to assist you.

cwdecm · ‎February 23, 2024

What can you do if overpayment was from 5 years ago? It seems like if I try to apply a credit to a current invoice it wants to apply the credit on the date of the overpayment. We have had audited financials we can make any prior period adjustments. What would be my options?

JoesemM · ‎February 23, 2024

Thanks for joining the thread, cwdecm. I'll guide you to the best support that can help you with your overpayment.

Since the overpayment was made five years ago and you've already made adjustments for prior periods, I would suggest seeking advice from your accountant on how to handle this situation in QuickBooks. They will be able to guide you on correctly applying the overpayment to ensure that your records remain accurate.

You can also find one by following the steps below:

Go to this link: https://quickbooks.intuit.com/find-an-accountant/.
Enter your City or ZIP code.
Click on Find a ProAdvisor.
Enter a Location and Filter by business type or industry.
Get connected with an expert.

I'll be sharing these resources that will guide you in tracking customer transactions and how to clear out your customer and vendor balances in QuickBooks:

You're always welcome to tag my name in the comment section below if you have other questions about overpayments. I'm always here to help. Take care.

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Overpayment of Invoice from Customer on QB Desktop Enterprise