Customer Overpayments and How to Create the Credits the Way I Need

I appreciate you laying out the details of your concern, @H_Morrow310. 

Let me further assist you by pointing you in the right direction of support to help sort out your issue with handling your customer's overpayments and credits. 

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Click the Reply button if you need more help with any QuickBooks-related concerns. Take care and have a pleasant day.

@H_Morrow310 

I need to add the credit for these amounts to the customers accounts while also taking them off the A/R aging detail sheet.

That's the problem and, honestly, a shortcoming of QBO.  Those amounts should be able to be listed as liabilities, not as a reduction in A/R (both of which are credit balances) and show as a credit on a customer's account.  The problem is that QBO uses A/R exclusively for customer accounts, so you can't have a credit on the customer's account and not have it show on the A/R aging/detail reports.  You can move those amounts out of A/R and into liability accounts but that eliminates QBO's ability to apply those credits to future invoices automatically.  Therefore, you will need to remember that those credits are available and then apply them manually. 

I read your post and have a similar question. I am fairly new to our company and discovered they had 3% Rebate program last year. They issued credit memos for each rebate - which shows up on the A/R report.  I wanted to see if you would share what process you used to move the credits off AR. 

Thank you 

Let me help you move your credits, Cybersis4u. 

We can create a rebate income account to move the credits off your accounts receivable. I recommend contacting your accountant to ensure the accuracy of books and for guidance in taking the process. If you don't have one, you can find a professional through this link: https://quickbooks.intuit.com/find-an-accountant/.

To proceed, here's the steps to create an account:

1. Go to Settings, then select Chart of accounts. 
2. Click New and choose Income 
3. From the Save account under column, select Income.
4. Type in Rebate Income Account in the Account name section. 
5. Once done, hit Save. 

Next, we can create a rebate item in the product and services tab. Select the Service type and choose the Rebate Income Account we've created. Once done, create an invoice and use the rebate item.

Lastly, link the invoices and credit memo by creating a receive payment.

1. Go to + New, then select Receive Payment. 
2. From the Customer dropdown, choose your customer. 
3. Tick the credit memo and the invoice to link them.
4. Click Save and close. 

Additionally, you can generate a report of your accounts receivable aging detail, and customize it to display specific accounts or customers.

I'm still all ears if you need further assistance managing your credit memo and accounts receivable. Just tap the reply button below for your response. 

Thank you for responding back so quickly, but this did not solve my issue, by creating an invoice - it puts it back into AR - where I don't want it. 

I am very interested in hearing from @Rainflurry  - as his post sounded more like what I was thinking:

His comment:  You can move those amounts out of A/R and into liability accounts but that eliminates QBO's ability to apply those credits to future invoices automatically.  Therefore, you will need to remember that those credits are available and then apply them manually. . 

I need to get the existing credits off the A/R Aging report. I have created an Excel spreadsheet to monitor the credits - as the credit is only good for 1 year - and will be voided if not used. Having a Liability account sounds like what I need - but just want to be sure I have created the proper Chart of Accounts and Item list. I have been given so many 'instructions' how to do this  - but each one so far has resulted in the amount showing up on the A/R. 

@Cybersis4u 

"I need to get the existing credits off the A/R Aging report. I have created an Excel spreadsheet to monitor the credits - as the credit is only good for 1 year - and will be voided if not used. Having a Liability account sounds like what I need - but just want to be sure I have created the proper Chart of Accounts and Item list. I have been given so many 'instructions' how to do this - but each one so far has resulted in the amount showing up on the A/R."

To get the credits off the A/R aging report, create a journal entry: debit A/R and credit the liability account.  You can make one journal entry that contains an A/R debit for each customer.  You need to include the customer under the NAME column on the journal entry.  That moved the A/R balance to the liability account but you still need to apply the A/R debit to the A/R credit to get them off the A/R Aging report.  Go to 'Receive payment' and apply the rebate you entered under 'Credits' to the journal entry that moved that to the liability account under 'Outstanding Transactions'.  You will need to do that for each customer.  Your A/R Aging Report should no longer show the rebates and your liability account should have the total of rebates.  

If you want to apply the rebate to a future customer invoice, you have a couple of options: 1) You can move the rebate from the liability account to an A/R credit for that customer (debit liability account, credit A/R) and then apply the credit when you Receive payment or, 2) create a service item called "Rebate" and choose the rebate liability account under 'Income account'.  Then, add that item to the invoice as a negative amount.  That will reduce the amount due on the invoice as well as the liability account.  I think that looks better from the customer's perspective because there is a separate line item on the invoice showing the rebate was applied.  Hope that helps.

@Rainflurry.   Thank you.  Hope this works.