Hi R Thompson!

The unapplied ACH payment, which is normally shown as a deposit in the customer's profile, is already saved as a credit/overpayment. It debits the bank account and credits the A/R by default.

I recommend sending a statement to your customer, showing their balance including the unapplied deposit because we can't just simply convert that deposit into a credit memo. It would require moving the deposit amount from A/R (deposit) to a clearing account, then back to A/R (as credit memo), which is not normally done in QBO.

Create a statement:

1. Go to Sales on the left navigation bar.
2. Select Customers and click the name of the customer in concern.
3. Click the New transaction button in green.
4. Choose Statement.
5. Set the Statement Type to Balance Forward.
6. Select the Start Date and End Date.
7. Select the name of the customer in concern.
8. Click Print or Preview if you want to check it first, and then Save and send.

Alternatively, you can create a temporary credit memo and send it to your customer. Then, save a PDF copy of it, attach the copy to the deposit (ACH payment), and delete it afterward.

Let us know if you have other questions in mind.