Tag Archives: Accounts Receivable

Refund an overpayment in QuickBooks

Software: QuickBooks Desktop accounting software

You have an option in QuickBooks Desktop accounting software to offset the overpayment received with the outstanding invoices via set credit feature or refund customer the overpaid amount.

Highlight the outstanding sales invoice from the customer payment transaction, click the Set Credit button and select the credit (overpayment) to offset with the invoice. You have to do the offset process a few times if the overpaid amount is supposed to knock off with multiple invoices.

On the other hand, you need to amend the original customer payment (the overpaid transaction) if you need to create a refund to the customer. At the lower left corner of the customer payment window, select the ‘Refund the amount to the customer’ radio button and click the ‘Save & Close’ button to continue with the refund.

Refund from customer payment in QuickBooks

You will see a payment transaction window on the following page, and then select the relevant bank account, payment mode and change the date if required.

Refund overpayment in QuickBooks.png

QuickBooks will update the accounts receivable and bank account once you have clicked the OK button.

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Overpayment received in foreign currency

Software: MoneyWorks accounting system

You get an error of ‘Receipt amount exceeds amounts allocated to invoices’ when try applying an overpayment to a foreign currency invoice. You have to use dummy invoices to transit the additional amount received between the Overpayment Received and the Accounts Receivable account.

Assuming Singapore dollar is your base currency. You received a payment of US$10,960 from a customer for an invoice of US$10,690. This cause an overpayment of US$270 which you need to capture as an outstanding to the customer.

For illustration purpose, we create a current liability account and name it as ‘Overpayment Received’ (Check with your accountant for an appropriate name use).

To offset the full amount received, you create a dummy sales invoice of US$270 to the customer. This invoice debit USD Accounts Receivable and credit Overpayment Received account of US$270, which will add to the outstanding of US$10,690.

overpayment invoice

Then, record a receipt of US$10,960 into your USD bank account and offset both sales invoices. This receipt debits USD Bank US$10,960 and credit USD Accounts Receivable US$10,690 and US$270.

receipt

Next, record a dummy negative sales invoice (credit note) to reverse the US$270 from Overpayment Received account. This negative sales invoice debit Overpayment Received and credit USD Accounts Receivable.

credit note

You have an option to offset the credit note with the future sales invoice or send a refund to the customer. The ‘Send a refund to debtor’ feature is under the Command menu which debits the USD Accounts Receivable and credit USD Bank account.

send refund to debtor

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How to show transaction currency instead of functional currency in QuickBooks Ageing Report?

Functional currency, also known as Base Currency or Home Currency, is a reporting currency used in businesses. Transaction currency in another hand is a currency used in the transaction such as Invoices, Payment or Receipts, which could be a foreign currency.

You have to convert the transaction amount to the functional currency based on the exchange rate if the transaction is a foreign currency. Software which supports multiple currencies will do the conversion automatically once the exchange rate has set.

QuickBooks accounts receivable

By default, QuickBooks ageing report prints in functional currency. For example, you have an outstanding receivable of US$10,000 at an exchange rate of 1USD:1.3SGD, the receivable report prints S$13,000 instead of US$10,000. You have to customise the report if you want the ageing report show in transaction currency (USD) instead of functional currency (SGD). Select The Transaction Currency’ radio button from the Display tab of the Customise Report wizard allow the ageing report to print in transaction currency instead. You can also do a currency filtering from the filter tab of the Customise Report wizard to limit the number of currency show in the ageing report.

QuickBooks is a very user-friendly accounting system with tons of built-in features and reports cater to small businesses. Join our demo to understand more on how QuickBooks can help you manage your business finance better.