Overpayment to Vendor Results in an Accounts Payable Balance

Madzack · ‎December 11, 2023

I am using QuickBooks Online, Simple Start edition. When I follow the recommendations for recording an overpayment to a vendor, it results in a negative balance on the vendor account and a negative amount under accounts payable on the balance sheet. In reality it should appear as an accounts receivable amount on the balance sheet (it is money the vendor owes me for the overpayment). How do I fix this?

(The recommended process found online for processing the overpayment is to match the payment to the bill but enter the actual overpaid amount on the bill line item. QBO automatically creates the credit on the vendor's account as a negative amount)

Rainflurry · ‎December 12, 2023

@Madzack

"When I follow the recommendations for recording an overpayment to a vendor, it results in a negative balance on the vendor account and a negative amount under accounts payable on the balance sheet. In reality it should appear as an accounts receivable amount on the balance sheet (it is money the vendor owes me for the overpayment). How do I fix this?"

That is how all versions of QB work. Yes, technically it's an asset but QB uses A/P to track vendor balances. If you move it out of A/P, QB cannot automatically apply the vendor credit to a bill. If you want to move it, create a journal entry and move it to an other current asset account. You can't have A/R for a vendor in QB. Obviously, you want to ignore @LeizylM 's advice, it makes no sense.

View solution in original post

LeizylM · ‎December 11, 2023

I understand that you're experiencing an issue with handling the overpayment to the vendor, Madzack. I'm here to guide you through the process for a seamless experience.

When recording an overpayment to a vendor, It won't be categorized under accounts receivable; instead, it should be recorded as a credit representing the overpayment as an asset.

If you have recorded a vendor refund, we can create a bank deposit affecting Accounts Payable (AP) to offset the overpayment.

Click the + New button, then select Bank deposit.
In the Account dropdown menu, choose the account where you got the refund.
In the Add funds to this deposit section, pick the vendor who gave you a refund under the Received from dropdown,
Choose Accounts Payable in the Account section and enter the Amount.
Select the method your vendor used to refund you under the Payment method.
Tap Save and Close.

Then, we can make a Pay Bill to link the bank deposit to the vendor credit. Here's how:

Click the + New button, then click Pay bills.
Choose the Payment account.
Select the bank deposit you just created.
Tap Save and Close.

Moreover, you may also want to check out this article to learn specific ways to customize your reports to get awesome insights in QuickBooks: Common custom reports in QuickBooks Online.

Kindly leave a reply if you require further assistance with refunds or have additional QuickBooks-related queries. I'm just around to assist you anytime.

Rainflurry · ‎December 12, 2023

@Madzack

"When I follow the recommendations for recording an overpayment to a vendor, it results in a negative balance on the vendor account and a negative amount under accounts payable on the balance sheet. In reality it should appear as an accounts receivable amount on the balance sheet (it is money the vendor owes me for the overpayment). How do I fix this?"

That is how all versions of QB work. Yes, technically it's an asset but QB uses A/P to track vendor balances. If you move it out of A/P, QB cannot automatically apply the vendor credit to a bill. If you want to move it, create a journal entry and move it to an other current asset account. You can't have A/R for a vendor in QB. Obviously, you want to ignore @LeizylM 's advice, it makes no sense.

AlcaeusF · ‎December 19, 2023

Hello Rainflurry,

Thank you for sharing your input to help address the issue. We love to see members supporting one another! Have a great day.

Topics

Training

Community

Resources

Overpayment to Vendor Results in an Accounts Payable Balance