How do I move an unapplied (over) payment in QBO to the outstanding balance of a later invoice and also show the credit paid against the later bill?

Hello there, @mark.

I recognize your sentiments about an unapplied (over) payment to the outstanding balance in QuickBooks Online (QBO).

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In QuickBooks Online (QBO), when dealing with an overpayment from a customer are recorded as credits to ensure accurate accounting and tracking of the excess payment. Recording also facilitates transparency in financial transactions and simplifies the process of applying these credits to future invoices. Let me guide you on how:

Apply the credit to an invoice you already created.

1. Select + New.
2. Click Receive payment.
3. Choose the customer, then the credit, and the invoice.
4. Select another pending invoice and enter the overpayment amount in its Payment column.
5. Then select Save and New or Save and Close.

If it's a new invoice, here are the instructions on how to apply the credit to it:

1. Select + New.
2. Select Invoice.
3. Create the invoice.
4. Select + New. Then select Receive payment.
5. Select the credit and then Save and new or Save and close.

To set up customer credits to apply to future payments by default, check this article for detailed steps: Handle a customer credit or overpayment in QuickBooks Online

By following these steps, you can effectively manage overpayments in QBO by transferring the credit to future invoices and accurately reflecting the customer's account balance.

Moreover, you can also set an overpayment as a refund. If you need to refund a customer for any reason, such as redeeming open credits or making a prepayment for an order that was cancelled before receiving goods or services, you can record it using Check or Expense. This will reduce your bank's balance and offset the customer's open credit, overpayment, or prepayment. It's a simple way to reimburse an accidental overpayment.

Furthermore, I'm adding this helpful article as your reference to learn how to void or refund payments you process and also how you can work with your sales through QuickBooks Online: 

• Void or refund customer payments in QuickBooks Online
• Sales and Customers for QuickBooks Online.

If you have other concerns about unapplied overpayment in QuickBooks Online, please don't hesitate to return to this post. I'll be here to lend a hand.