Can another customer pay off overdue invoices by a different customer? 1st customer was tax-exempt, customer paying balance is not.

Thank you Adrian_A! Will this work even though some of these invoices are partially paid and the second customer now paying is NOT tax-exempt? Would I adjust for this when reconciling the account? I just want to make sure I don't do anything crazy.  thank you in advance! 

Thanks for getting back here and adding some details about your concern, hectorjr.

Yes, the process will apply to partially paid invoices. When following the steps provided by Adrian_A, make sure to adjust the amount on the receive payment page. Doing so will pay the invoice in full or leave an open balance if it's partially paid. 

I'd also recommend consulting with your accountant for advice. 

We're always around if you have any follow-up questions. Just leave a comment below and we'll get back to you.

Thank you Adrian_A this worked flawlessly!!

The beginning is kind of confusing. Who gets the first credit memo?

Thanks for joining this thread, @eshorvath.

Can you please provide us with additional information or screenshots of what you're trying to achieve in QuickBooks? I'd be happy to provide you with the exact solution that you need.

I'll keep an eye open for your response. I'm always here to help.

Customer A was billed 450.  He paid 800

Customer B is his neighbor. Customer B was billed 350.  Customer A said to pay his overpayment of 350 toward customer Bs 350 invoice.

Thanks for the prompt response, @eshorvath.

I appreciate you for adding additional details to your concern. I'm here to lend a hand with moving customer credit balances to pay another customer's invoice in QuickBooks Online (QBO).

We can use the Journal Entry feature to move payments between customers and accounts to balance your books. Follow these steps to proceed:

1. Click the + New button, then select Journal entry.
2. Enter the date in the Journal date.
3. On the first line item, choose Accounts Receivable (A/R) from the Account drop-down.
4. In the Debits field, enter the amount being transferred.
5. Add a note of the reason for the journal entry in the Description field.
6. From the Name drop-down, select the customer's name the credit is being transferred from.
7. On the second line item, choose Accounts Receivable (A/R) from the Account drop-down. The credit amount and the description auto-populate.
8. From the Name drop-down, select the customer's name to which the credit is being transferred to. Then, click Save.
   

Once done, let's apply the credit to the other customer. Here's how:

1.  Click the + New button, then choose Receive Payment.
2. Select the customer's name that the credits were transferred from.
3. Place a checkmark on the journal entry you created under Outstanding transactions.
4. Under Credits, check the credit memo you need to transfer. Then, select Save and close.
   
5. Click the + New button again, then choose Receive Payment.
6. Select the customer's name that the credits were transferred to.
7. Under Outstanding Transactions, select the invoice you want to apply the credit to.
8. Locate and check the journal entry you created under the Credits section.
9. In the Payment column, enter how much of that credit you want to apply. Then, select Save and close.
   

If you're good with your transactions, you can now proceed to reconcile an account in QBO. If everything matches up with your bank or credit card statements, you know your accounts are balanced and accurate.

Please let me know how it goes after performing these steps to transfer the credits to another customer by dropping a comment below. I'm always here to provide additional assistance. Have a great day ahead!