How to account for the overpayment
Create a refund for the overpayment
To create a credit note for the overpayment
This guide outlines the process for managing customer overpayments, including how to record the overpayment, explain the receipt, and then either refund the customer or raise a credit note.
How to account for the overpayment
Step 1.
To account for a customer overpayment, an overpayments invoice must be created. This is crucial because money in Clear Books can only be allocated to invoices, allowing the overpaid receipt amount to be cleared.
It is vitally important to apply an overpayments account code to this invoice. This enables the use of double-entry bookkeeping to correctly account for the refund or credit note later on in the process.
To begin, navigate to the Sales > Invoices menu and click on the “Create invoice” button.
Step 2.
Select the customer who made the overpayment.
For the description, use something like "overpayments invoice."
When creating the invoice, add an "overpayments account code" if you don't already have one.
Set the "Account type" to "current liabilities."
Save the invoice.
How to explain the receipt
Step 1.
Head to the Money > Bank accounts menu and click on the link to explain your transactions from an imported statement.
Please note: If you don't use import statements, you can click on the “Money In” option for the appropriate account. Fill in the details of the receipt and hit explain, then continue from Step 5.
Step 2.
Find and click on the receipt that includes the overpayment.
Step 3.
Allocate the receipt to the invoice that was overpaid. If there were multiple invoices, please allocate the receipt to each in turn.
Step 4.
Allocated the remaining amount of the receipt to the overpayment invoice created in step 1.
Credit or refund the overpayment
You can now choose to either issue a refund for the overpayment or generate a credit note, which can be applied to future invoices.
It’s important to use the overpayment account code created in step 2 of the “How to account for the overpayment” section above.
Create a refund for the overpayment
Clear Books offers several methods for processing refunds. The most straightforward approach is to locate the customer's payment on your imported statement after you have physically refunded them. Then, simply explain the transaction using the "Refund" tab.
Select the appropriate contact and make sure to use the overpayments account code.
To create a credit note for the overpayment
Head to Sales > Credit notes and create a new credit note.
Select the appropriate contact and make sure to use the overpayments account code.
Please note: Instead of immediately refunding an overpayment, you might choose to initially credit the customer. Later, you can decide to refund the money, allocating the payment to the credit note created in Clear Books.