We received an Overpayment on a customers account how do we reconcile the payment total when matching invoices to the payment?

Matching an invoice overpayment to your downloaded payment transactions is my priority, @gmoran59. Let me guide you on how.

When you receive an overpayment on a customer's account, you'll have to use the Receive payment option to enter the actual amount paid for the invoice. Then, choose to either do a refund or keep it as a credit (only if you've set up customer credits to apply to future payments by default). You can refer to this article to learn more about this: Handle a customer credit or overpayment in QuickBooks Online.

Once you're done, deposit the payment (from the Undeposited Funds account) using the Bank deposit feature. This way, you're able to deposit the funds or the received payment in the bank. Here's how:

1. Go to the + New button.
2. Select Bank deposit.
3. From the Account dropdown, choose the account you want to put the money into.
4. Click the checkbox for the payment you've received.
5. Select Save and close or Save and new. 

Then, once the payment is downloaded, match it to the existing entry in QuickBooks to keep your account updated. For the step-by-step guide, you can refer to this article: Categorize online bank transactions in QuickBooks Online.

Also, I'd recommend reconciling your accounts every month. This will help you monitor your income/expenses and detect any possible errors accordingly. You can check out this article for the detailed steps: Reconcile an account in QuickBooks Online.

Please don't hesitate to let me know if you have other concerns about managing invoices and payments in QBO. You can drop a comment below, and I'll gladly help. Take care, and I wish you continued success, @gmoran59.

I understand you would create a credit for the over payment to the customer account but what do you do when the reconciling the invoices to the payment receipt for the over payment amount.  If I create a Credit memo it shows up at the bottom of the receive payment screen but if i chose that entry it increases the amount to credit reference not reduce it so what do i do?

Thank you for the prompt reply, @gmoran59. I'll help clear things up for you about customer overpayments in QuickBooks Online (QBO).

The way you deal with a customer's overpayment depends on what he wants to do with it. If he wants a refund, then you need to create an expense or a check. Otherwise, you create a credit note. 

As for the credit note, you have two options for it. You can apply it on a different invoice:

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.

In your situation, you can include the overpayment in the Receive Payment screen. There isn't a need to manually create a credit note for this process, since the system will automatically create it for you. Edit the Amount received box to including the overpayment, and only select the invoice in question. You'll get the pop-up message asking if you want to Save it as a credit.

See the screenshot below for your reference:

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

In case your customer considers an overpayment as a tip, you can view this article for the steps: Record an invoice overpayment as a tip.

Feel free to post a reply in the comments below if you have other questions. I'll be sure to get back to you. Have a nice day!

Hello. When I go to accept an overpayment from our client that overpaid their invoice, we are getting an error stating that we cannot overpay the invoice. I am using Desktop Enterprise 22 version QB. The invoice shows they owe $74.87 and they are paying $612.53. I used to put the amount of the actual payment received and it would then allow you to create a credit memo and leave the overpayment or apply it to another invoice. Not sure what is going on now.

Nice to have you joined this thread, @Rena6055.

Allow me to chime in and shed some light on how to get around the error message when accepting an overpayment in QuickBooks Desktop (QBDT).

I recommend deleting and recreating the invoice to isolate the issue. If this is not the case I suggest updating your QBDT to the latest release to ensure it's running with the newest patch and fixes. I'll walk you through the steps: 

1. Go to the Help menu and select Update QuickBooks Desktop.
2. Select the Update Now tab. 
3. Click Get Updates to start the download.
4. When the download finishes, restart QuickBooks and accept the option to install the new release.

You can also utilize this article for more details: Update QuickBooks Desktop to the latest release.

If the issue persists, I suggest running the Verify and Rebuild utility tool. This will diagnose your company file for errors and fixes them right away.

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.

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 dazzling day ahead!

Somehow, Quickbooks online just does not listen to customers questions, If a customer by mistake pays an invoice twice into your bank account, but does not want a refund but to set it off against future invoices how do you post that receipt into their sales ledger account, there is no point in raising a credit note as there is no credit note due just a payment on account. So how do you put that payment on account into the customers Sales Ledger account. Simple question that Quickbooks just does not seem to ever understand.

@Nuttyboy 

Record the second, duplicate payment as a deposit.  Select A/R as the account on the deposit and make sure to select the customer under 'Received From'.  This will book the overpayment as a credit on their account without needing to create a credit memo which, obviously, you don't want.

A/R ???

Did you ever sort this query out as I also have the same one!

Let me help you sort this thing out, @Janeeobrien73.

Before matching the invoice overpayment, you'll need to record it first through Receive payment by entering the exact amount paid by the customer.

You can choose to record it as a refund or a credit (if the customer is set up to apply for future payments by default). Then, handle the customer credit or overpayment. 

After, in the Bank deposit feature place the payment under the Undeposited Funds account. So that, you'll be able to deposit the funds or the received payment in the bank.

Refer to the steps below as to how to do it:

1. Click the + New icon.
2. Go to the Bank deposit feature.
3. Tap the Account dropdown, and select the account you want to put the money into.
4. For the payment you've received, tick the checkbox.
5. Click Save and close.

To keep your account updated, once done downloading the payment match it to the existing entry in QuickBooks. You can read this article for the detailed steps: Categorize and match online bank transactions in QuickBooks Online.

You can also record an invoice overpayment as a tip in case your customer considers it that way.

Feel free to reply to this post if you have additional questions about the customer's overpayment. I'll be willing to assist you. Have a good one!

Thanks Bryan_M for your reply.

Please can you clarify how I record this as a credit.  Do I Select New/Credit Note?

I have set the account so that credits can be allocated against invoices raised in the future.

Thanks

Thank you for getting back for clarification, Janee.

Let me shed some light on entering a credit for an invoice overpayment in QuickBooks Online (QBO).

You’re correct about going to the +New icon and selecting the Credit Note or Credit Memo. I want to elaborate on these steps further so you can be appropriately guided:

1. Log in to your QuickBooks Online company.
2. Tap the +New icon and select Credit Memo under the Customers column.
3. In the Customer dropdown, choose the name of the customer you are creating this credit.
4. Enter the other necessary information relevant to this transaction. Then, enter the exact amount to refund your client.

If you have set your account preferences to automatically apply the credits to any open invoices under that customer. This will then be used or applied to it. However, if you want to hold this first and apply it to future transactions, you can change your account preference by checking out this article and referring to Step 1: Turn on or turn off Automatically apply credits: Create and apply credit memos or delayed credits in QuickBooks Online.

On the other hand, if you don’t want to create a credit memo for the overpayment. You can make a Bank Deposit. You can follow the steps provided by my colleague, Bryan_M, by depositing the invoice payment. 

Then, scroll to the bottom and go to the Add funds to this deposit section. Enter the credit transaction and select the Accounts Receivable (A/R) for the affected Account. Also, please be guided to enter the credit amount under the Amount column. I also added a snapshot for visual reference:

From then, you can start categorizing your transactions and reconciling them to double-check any discrepancies and ensure your accounts are balanced.

Let me know if there’s anything else you need assistance with creating credits for your customers. The Community always has your back. Have a good one!

Thank you RoseJillB

So I have raised a Credit Note and categorised this under the same category that the original invoice was raised under and that they have already paid.

I then need to going into the Banking screen to allocate this payment correctly.  What category would I put this in here?

I am sorry, I find QB's illogical when it comes to these type of issues.

Thanks

I'd like to know why QBO will not allow me to record the actual amount paid, in this case, an overpayment. QBO changes the amount to the invoice amount. Desktop version is far superior. 🤦🏼‍

It makes sense to handle it this way, however, QBO will NOT accept the overpayment, no matter how many times I try to change it. This is a problem because the customer wants proof that there is a credit on their account, but I can't figure out how to get it recorded. Not to mention the payment will not match my bank statement next month. This is beyond stupid. 

For the record, I never had this issue with Desktop versions. 

I appreciate you posting your concerns here, @Acme_user and @generusername.

I understand your frustration and I know how important it is to accurately record transactions in QuickBooks Online (QBO). No worries, I'm here to elaborate or clarify things out so you can get back to working order.

First off, regarding @Acme_user's concern, you have the option to enter the actual amount paid on your customer's invoice. Here's how:
 

1. On your QBO account, go to the +New, then select Receive payment. 
2. Choose the customer you want to receive the payment from.
3. On the Amount received box, enter the actual amount paid. 



4. Once done, click Save and close.

 By running a Transaction List By Date report, you'll get to see your customers' credits that were applied to their accounts, @generusername. Here's how:

1. On your QBO account, go to the Reports tab.
2. Enter Transaction List By Date in the search bar.
3. Customize the report by adding Open Balance in the column, and choosing Payment as Transaction in the Filter option. Tip: You can also customize the date and specify the customer's name.



4. Once ready, click on Run report.

You also have the option to share via email, print, or export the report.

Additionally, I'll also share this link to serve as your reference if you want to know more about how to manage your company's income and customers in QBO: Sales and Customers Help Articles.

Feel free to leave a reply if you have additional queries about receiving payments and recording them in QBO. The Community team always has your back. Keep safe.

I agree. It should be simple to record the overpayment to the next open invoice, which I did. The full overpayment cleared and reconciled on my December bank statement. Now My January bank reconciliation is off by the overpayment amount, which was credited to the invoice paid in January. Why should we have to create a credit memo for something already applied, deposited and reconciled?