In the past prepayments from customers would automatically deduct from a new invoice, but not anymore. The amount now shows as overdue in the customer account?

Hi there, i8kruger.

I'll provide information on why the prepayments from customers wouldn't now automatically deducted from a new invoice. Then, share steps to show the overdue invoice as paid.

It could be the Automatically apply credits feature is turned off that's why the prepayments were not automatically applied to an invoice. And, the reason the amount now shows as overdue in the customer's account. To fix this, I suggest to manually link the available credit note of the customer to the open invoice.

Here's how:

1. Click the + New icon at the left panel.
2. Choose Receive payment.
3. Enter the customer’s name. Make sure you choose the same customer or project you selected in the invoice.
4. In the Outstanding Transactions section, choose what invoice you want to apply to the credit note.
5. From the Credits section, select the credit note. Then, in the Payments column, enter how much credit your customer wants to use.
6. Make sure the total to pay (if any) is correct after applying the credit note.
7. Select Save and close.

For additional information, you can click this article: Create and apply credit notes or delayed credits in QuickBooks Online.

Once done, you can follow the steps below on how to turn on the feature for automatically apply credit to the open invoices.

1. Click the Gear icon.
2. Select Account and settings.
3. Go to the Advanced tab.
4. Click the Pencil icon in the Automation section.
5. Check the Automatically apply credits box.
6. Hit Save, then Done.

Please check this article to see steps on how you can apply for the deposit entry as an invoice payment: How to link a deposit to an invoice.

Please know that you're always welcome to post if you have any other concerns. Wishing you and your business continued success.