A Customer Overpayment occurs when a customer pays more than they were billed. As a result, the Cash Receipt will continue to have a balance after being applied to the original Billing.
Summary of Steps to keep the Overpayment:
If a customer overpayment is small and immaterial you may wish to simply keep it rather than taking the trouble to refund it. In this case please take the following steps:
- Create a Billing for the customer. Set the GL account on the billing line to sales or miscellaneous revenue account. Post the billing.
- Navigate to the cash receipt with the overpayment. Apply the balance of the cash receipt to the overpayment.
Summary of Steps to Refund the Overpayment:
If a customer overpayment is material you will want to refund the amount to the customer. Please follow these steps:
- Create a Billing for the customer. Set the GL account on the billing line to a balance sheet clearing account such as "Accrued Expenses". You may want to create a specific GL account for this use case. Post the billing.
- Navigate to the Cash Receipt with the overpayment. Apply the balance of the cash receipt to the overpayment.
- Create an Account Payable for the same amount in step 1. Set the GL account on the account payable line to a balance sheet clearing account used in step 1. Post the Account Payable.
- Create a Cash Disbursement by following the standard instructions for creating a single or batch cash disbursement(s).