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pam1308
August 22, 2022
Question

Excess payments from customers

  • August 22, 2022
  • 3 replies
  • 0 views

The excess payments received from some customers were showing as negative balances in the Accounts Receivable.  I tried to move them to a new Account named Unapplied Payments (Other Current Liability).

I journalized each amount and then tried to set them off against the negative balances in A/R account. When I clicked the "Clear Payment", the whole invoice which had been paid, is being shown as unpaid.

Can someone please help me to understand what has happened and how to rectify that?

3 replies

Rainflurry
Rainflurry
August 22, 2022

@pam1308 

 

You may know this already, but you need to leave the overpayments as a negative A/R in order to apply it to a customer's invoice.  That is just how QB works.  Yes, technically the overpayment is a liability but once you create a journal entry and move it from A/R to a liability account, you lose the ability to apply it to an outstanding invoice.   

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TirzahC
August 22, 2022

I'll help clear things up for you about customer overpayments in QuickBooks Online (QBO), pam1308. 

 

I agree with the provided insights above about handling overpayments to a customer's invoices. 

 

Also, the way you deal with a customer's overpayment depends on what he wants to do with it. You have three options on how you can handle the overpayment:

 

  • Apply the credit to an old invoice or future invoices
  • Refund the customer
  • Record the overpayment as a tip 
     

Here's how: 

 

  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.

 

You can also set up customer credits to apply to future payments automatically.

 

  1. Go to the Gear icon and select Account and Settings.
  2. Select Advanced.
  3. In the Automation section, select Edit, and select Automatically apply credits.
     

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

 

Here's an article that may come in handy in the future for your business: 

 

 

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.

L
LN74
August 25, 2022

Good morning!   We had a customer overpay way back in May of 2020.  I was not employed here at that time.  It is showing as a negative in the A/R aging report.  I am unable to apply the amount to a current invoice and can't seem to find the steps to take to do so.  We are using QB desktop version.  Any help you could give would be appreciated!  

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Anjali 12
November 30, 2022

Can you give brief explanation about this solution please?   

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Anjali 12
November 30, 2022

Can you give brief explanation about this?

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JamesM4
November 30, 2022

Hello Anjali. Thanks for chiming in on this thread. To make sure I'm on the same page as you, could you highlight exactly where you need more clarity in regards to the explanation provided above?

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Anjali 12
November 30, 2022

I need more explaination about journal. How we can do it? Because i did but might be somting wrong.

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