The topic below outlines what an overpayment looks like when recording it as a Customer Payment, as well as options for handling the overpayment (either applying to a subsequent invoice, or refunding the overage).)
What’s covered in this document:
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Recording the Customer Overpayment
- Navigate to financials and hover over to Accounts Receivable menu item and select customer Payments sub-item
- Enter the summary information for the customer as shown below. All required fields must be populated to save the payment.
- In the example, below, we are recording a payment from a customer in the amount of $3,000 when only $1,801.71 was due, resulting in an overpayment of $1,198.29
From the left hand menu select Paid Documents. Completed Invoices will be listed. Select the document to pay, in this case invoice number, 01008. Notice that our payment amount of 3,000.00 is being applied to an invoice amount of $1,801.71. As we select the invoice, the Balance of the Customer Payment will be updated to reflect the selection.
As shown above, there is a remaining balance of $1,198.29 that can be applied to future invoices, or refunded through AP.
Subsequent Handling Of The Overpayment
OPTION 1: Customer wishes to apply the over payment to another invoice
In the example below, a review of the Customer Payments list shows an overpayment of $1,198.29 on Customer 1's account. We are going to lessen the subsequent Customer Payment by this overage. In the example below, we will do that related to sample invoice UNANET-00969.
A/R Aging is also showing an overpayment of $1,198.29 for Customer 1:
Record the subsequent payment (amount due less previous overpayment amount)
The amount we would have invoiced next was $101was $101,650.13 for invoice #UNANET-00969, but since we are going to apply the overpayment amount of $1,198.29, they only owe $100,451.84. As a result, they send us a payment in the amount of $100,451.84. We record this payment as outlined below.
Step 2: Choose paid documents and select the invoice to apply the payment to
After saving the summary screen, we choose Paid Documents in the left menu. We We select the invoice we want to apply payment to, Invoice #UNANET#UNANET-00969, as well as the Customer Payment with the overpayment amount 'CP 44' (where the Document number of the Customer Payment is 44). Once we do this, the Balance for the Customer Payment is $0.00.
When reviewing the A/R aging, Invoice 'Unanet-00969' has been paid in full and there is no credit on the customer's account
A review of the Customer Payments screen no longer shows an overpayment on Customer 1's account.
In this option we will refund the overage amount to the Customer as follows:
- Write off the credit balance on the customer account. This should credit the AR write off account and debit Accounts Receivable account.
- Create a AP Voucher debiting the AR write off account.
- Issue a check against this voucher.
The amount over the invoice is saved as an "Unapplied Payment" and the excess amount is credited to the "AR Unapplied Payment Account" specified in the Default Posting Group:
A/R Aging is showing an overpayment of $1,198.29 for Customer 1:
The GL Details Report will also show an overpayment of $1,198.29 for Customer 1.
Step 1: Edit the customer payment details to specify the AR Unapplied Payment Account
Go to the Customer Payments screen (Financials - > Accounts Receivable) and list the payments for that specific customer. There will be an icon with green + sign on the left of the document on which this over payment was received. Click on this icon.
Clicking on the green icon will take you into the edit mode of this payment, where you can click on Details:
In the detail section, apply the excess amount to the "AR Unapplied Payment Account". Once posted, the result will be a debit and a credit to the "AR Unapplied Payment Account" (yes, debit and credit to the same account). It will also debit the Accounts Receivable account. The A/R Aging report will no longer show the overpayment.
Step 2: Ensure the customer org has a vendor profile
If the Customer Org does not already have a Vendor Profile, go ahead and set that up now in Organization edit, Vendor Profiles:
Enter an AP Invoice to pay the customer
Enter an AP invoice to pay the customer the excess amount via the Vendor Invoices screen. This will debit the AR write off account.
Specify the AR Unapplied Payment Account in the Vendor Invoice Details
Click on Details in the left menu. Specify the "AR Unapplied Payment Account" account which will debit this account resulting in off-setting the credit balance in this account. This will also credit the AP payable account and create an item on the AP aging to issue a check to the customer.
This will also credit the AP payable account and create an item on the AP aging to issue a check to the customer.
Step 5: Create a Vendor Payment to issue a check
Follow the same steps as issuing any other vendor check: