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When paying an invoice, sometimes your customers may accidentally overpay or record the payment twice. Mistakes can happen, but there are a number of ways you can easily handle the overpaid amount:
- apply it to another unpaid invoice
- create a credit and refund the amount
- create a credit and apply it to a future invoice
- or write it off.
It's a good idea to first check with your customer on their preferred option; but no matter what route you choose, you'll be back to doing business in no time.
Have you simply recorded the wrong payment amount? Delete the payment and record it again.
To create a credit for the overpaid amount
How you create a credit depends on how the overpayment was made. After creating the credit, you can settle it by refunding the amount or applying it to a future invoice. For more information, see Settling credits.
If your customer overpaid the invoice amount
When recording the payment in the Receive Payment window, enter the full payment in the Amount Received field and in the Amount Applied column in the scrolling list. These amounts must match or you'll get an unbalanced transaction error. A credit for the overpaid amount will be automatically created.
After creating the credit, you can settle it by refunding the amount or applying it to a future invoice. For more information, see Settling credits.
If your customer paid an invoice twice
Apply the first payment to the unpaid (open) invoice as you normally do and then record another customer payment and apply the second payment to the same invoice. As this invoice is now paid (or closed), you'll need to select the Include Closed Sales option to see it. A credit for the second payment will be automatically created.
You record the payment using the Receive Payment window or by selecting the Receive Payment option in the Bank Feeds window.
The Out of Balance amount must be zero before you can record the transaction.
After creating the credit, you can settle it by refunding the amount or applying it to a future invoice. For more information, see Settling customer credits.
To write-off a small overpaid amount
Sometimes the amount is very small, like a rounding error of a few cents. When this happens, you can record a new invoice for the overpaid amount (allocate to a rounding income account, if you have one) and then apply a credit to this invoice to close it (see table above for details on how to create a credit). Learn more about accounting for bad debts.
Why am I getting the error "An unbalanced transaction may not be recorded"?
When recording your receive payments transaction the error "An unbalanced transaction may not be recorded" may occur.
This will occur when the Amount Applied column doesn't match the Amount Received. When doing an overpayment remember to enter the Amount Applied column as the full amount received.
Why can't I find the overpayment transaction, or it shows as a different amount to what I actually received?
If you recorded the overpayment using Receive Payments, it's possible a value was entered as a finance charge. For help finding, deleting or reversing finance charges, see Finance charges paid by customers.