Overpayments can be challenging at times, or even forgotten. There are some easy ways to handle overpayments within Xero.
Let’s take a look at a few ways we can record an overpayment and apply this to an invoice/bill or refund it directly. In Xero, the term “invoice” relates to a sale, and a “bill” relates to a purchase. I’ve only referred to invoices below, but these processes relate to both.
To Record (handle) an Overpayment, you can either:
- Simply enter the amount paid directly onto the invoice, and if the amount exceeds your invoice total, Xero will automatically calculate an Overpayment transaction.
- Create an Overpayment Receive Money / Spend Money transaction in your bank account
- During reconciliation, create an Overpayment Receive Money / Spend Money transaction
Allocate or Refund an Overpayment (Resolve the overpayment)
Once the Overpayment transaction has been entered into Xero, a cash refund can be recorded or you can allocate the overpaid amount to an invoice for the same Contact in Xero.
- The Allocate option will appear in the Overpayment Options drop down menu while viewing your Overpayment transaction.
- If a contact has a new invoice you created Xero will ask if you wish to allocate the overpaid amount against this invoice.
- You can record Cash Refunds on the Overpayment directly and then reconcile them with your Bank Statement line.
(XERO) have some great Help Centre pages that step through Overpayments in Xero. You can check them out here, and call us for help!
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