There are times a customer may overpay or double pay an invoice. This blog explains how to handle this situation in QuickBooks.

An Example of a Customer Credit in QuickBooks

We have a new customer. We send the customer an invoice for $100 (shown below). However, the customer sends us a check in error for $150 instead of $100. So how do we handle this?


Our New Customer sends us a check for $150 in error. We will apply $100 to the invoice and have $50 left over. Let’s look at how this works.

  1. First, notice that we need to tell QuickBooks that we are receiving a payment for $150, even though the amount due is only $100. Do not enter the payment amount received as $100. We are receiving a check for $150 and the bank account will not balance otherwise. We will use $100 to pay for the invoice and we have $50 left over. We will either leave the $50 as a credit to be used later or mail the customer a $50 refund check.
  2. Next, make sure that there is a checkmark next to the $100 invoice being paid. This tells QuickBooks that there is still $50 left over
  3. QuickBooks will then show an “OverPayment” message at the bottom of the screen. It gives us two options:
  • Leave the Credit to be used later
  • Refund the amount to the customer

Leave the Credit to Be Used Later

In our example, the customer would like us to keep the $50 credit and apply the overpayment amount to the next invoice due. We simply select “Save & New” or “Save & Close” at the bottom. QuickBooks will now leave a $50 credit in the customer account.

By the way, when you select save, you will see the following popup message:

At this point, you are given the option to print a credit memo or select “OK” to continue without printing. Here is an example of a Credit Memo:


Customer Credit on the A/R Report

Once we use $100 to pay the invoice, we have a $50 credit in the customer account. You can see the $50 credit on the A/R report below. In our example, there are no other invoices due.

Create a New Invoice

Next, after we complete more work, we create another invoice to the New Customer for $100 (shown below).


When we create this invoice, QuickBooks will give us a popup message, asking if we want to apply the outstanding credit balance.

Answering yes will automatically apply the payment to this invoice. We are going to answer no. In our example, we do not wish to apply the credit until we receive the payment for the remaining amount.

How to Apply the Customer Credit in QuickBooks

When the customer pays the second invoice, they pay us only $50 and ask us to apply the $50 credit. So how do we handle this in QuickBooks?

First, receive the payment as normal. Remember, only enter the check amount of $50 as the payment amount, not $100 amount due.

Notice that once the $50 payment is entered, QuickBooks shows some messages at the bottom of the screen:

You will then see the Discounts and Credits window. Put a checkmark below “Available Credits”. The amount to use column shows the $50 credit and “applies” that amount to the invoice. You can select any open invoice that you wish. In our case there is only one. Select done at the bottom of the screen.

You will then see a credit of $50 on the Customer Payment screen.

The Customer Account After Payment with a Credit

After we apply the payment, we can see that the customer register shows a zero balance.

Refund the Amount to the Customer

If the customer wanted a refund check, we can select the option “Refund the Amount to the Customer”. In our example, we sent an invoice to the customer for $100. They paid us $150 in error and asked for the $50 overpayment to be refunded.

Once you save the payment, you will see a refund check (shown below). However, there is no option on this window to print the check.

Printing the Refund Check

In order to print the refund check, select the “Print Checks” icon at the bottom lower right of the Home Screen. Select the check and print.

A second way to print the check is to select “File” at the upper left of your screen, then Print Forms > Checks.

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