How to receive under and over payments in QuickBooks Desktop

In this tutorial we will see whether how we can record under and over payments and apply the over payment to an invoice.

 

First, let me show you the customers balance in the customer center. Here you can see that there are only two customers with balances at this point in time. Now let’s go to the “Customers Payment” window by clicking on “Receive Payments” and select a customer from whom you have received some payment. Let’s say, the fictional customer “Kristie” sent us a check of $500. 

Tutorial Instructions:

 

Well, when we add the 500-check amount against the invoice of 600, the QuickBooks apply the amount to the invoice and also informs us about the remaining balance here in this box and gives us two options, either to keep it as under-payment or write-off the remaining balance. Well, if we select the write off option and try to save it, it will open a small poo-up window asking you to categorize the amount you want to write off.  And since I am not writing off the balance, I am keeping it as under payment. Well writing off is something that is not recoverable.

Anyhow, change the date and write the check number and then click on “save and close” button if you don’t want to receive more payments. Now, our payment has been recorded and lets go to the customers center to see the changes and here you can see that the Kristie’s balance has gone down to 100 from 600.

Now, let’s say, Kristie sent us another check of “150” for the remaining balance and asked us to keep the balance to be used in future business activities.  Now, let’s go to the “Customer Payment” window and apply the check amount to the kristie’s remaining balance and here you can see that as soon as I selected “Kristie” in the “received from” field, it showed us the original invoice clearly stating the original amount and the due balance of that invoice. Now, If Kristie sent us the check of the due amount only, which is $100, then it would just clear the balance but she sent us a check of $150.

Now, let’s add the $150 amount in the “Payment Amount” field and as soon as we added the amount, the QuickBooks informs us here in this box that there is some over-payment and gives us two options, either keep the over-payment as Credit balance or just refund it to the customer right away.

Well, if you just click on “save and close” button by selecting the first option which is “Leave the Credit to be used later”, then it will just record the payment and close the window…..but if you click on the “save and close” button by selecting the second option, then it will open a small pop-up window asking you to write a check to refund the over payment and since kristie has informed us to keep the balance to be used in future activities, we are not going to write a check for the balance and then just close the pop-up window by clicking on the cross sign. It will close the window and record the payment.

Now, let’s go to the customer center to see the changes, and here you can see that its showing negative -$50 balance under kristie’s account.

Now, let’s create another invoice and here you can see that it’s showing the kristie’s balance and when you will save the invoice, the QuickBooks will open a small pop-up window letting you know that this customer has a credit balance and if you want to apply that balance to this invoice, just click on yes but at this point in time, we will not apply the credit balance to this invoice instead we will apply it to the payments first. So, just save the invoice by clicking on the “No” button.

Now, let’s receive the payment of the newly created invoice and apply the credit balance to the payment and here you can see that as soon as I selected our fictional customer named kristie, it showed the newly created invoice and the credit balance here in this box. Now, just select the invoice and write the check number and then to apply the credit, click on “Discounts and Credits”, it will open a small pop-up window where you will have two tabs named “Credit and Discount” and since we are just applying credit to this payment which was an over payment from the previous invoice, we can just apply the whole credit by selecting it or we can even change the credit amount here too. And since I am going to apply the whole amount, just click on “Done” without changing the credit amount, and here you can see that it has applied the credit balance to this payment and also, it’s showing the summery of this payment here in this box, mentioning the original amount of the invoice and the applied credit. Now just click on “Save and Close” button to record the payment.

Now, let’s go back to the customer center to see the changes and here you can see that its showing zero balance under Kristie’s account. Now, let’s I create credit balance by creating another invoice to apply it to an invoice. Here you can see that I have created some credit balance under kristie’s account. Now lets create another invoice and here is the credit balance that we want to apply to this invoice. Now, click on “Apply credit” and here its asking you to save the transaction first to apply the credit. Just click on “Yes” to save the invoice and apply credit pop-up window will open with the credit balance info.

Now, here we can select the credit amount, or we can change the credit amount we want to apply to this invoice. And since we want to apply the full amount, I am not changing the amount here. Now just click on “Done” after selecting the credit amount to apply it to the invoice. Now here you can see that the credit amount has been applied to this invoice and the invoice balance has gone down to 300. Now click on “save and close” button to save the invoice. and when you go to the “Customer Payment” window and select the invoice it will give you the original and due amount of the invoice. Now just make your changes and click on save and close button to receive the amount. Now lets go to the customer center to see the changes and here you can see that its showing zero balance under Kristie’s account.

And this is how you can receive Under and Over payment and then apply it to while receiving payment and creating invoices.