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Overpayment of Vendor Bill – How to Handle in Quickbooks

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You overpaid a bill or bills that were sent to you by one of your vendors, so how do you handle this bill overpayment in QuickBooks?

The first step in QuickBooks is to overpay the bill and get a credit. The second step is to either get a refund from the vendor and enter it as a deposit or use the overpayment credit on a another bill you received from the vendor.

Overpay the bill(s)

  1. Go to Pay Bills (vendor > pay bills)
  2. Select the appropriate bill(s) that you overpaid (by putting a check mark next to the bill)
  3. In the Amt. to Pay column, add the overpayment amount to a bill that you will be paying
  4. Continue as usual and pay selected bills

What this overpayment will do is create a credit with the vendor.

Option A - Receive the credit as a refund

If you will not purchase anything further from the vendor, you can request a refund. You have to physically contact the person yourself and get the company to give you a refund.

When / if you get the refund, this is what you do.

  1. Go to Record Deposits (banking > make deposits)
  2. For the Received From choose the vendor's name and the From Account choose Accounts Payable
  3. Receive the payment

This effectively creates a bill from your vendor that you can then use your credit to pay off.

Option B - Pay another bill using the credit

To use the credit against a bill:

  1. Go to Pay Bills (vendor > pay bills)
  2. Select the appropriate bill(s) that you want to pay using the credit
  3. Below the bills click on the Credit button and use the credits (if you have credit left over, highlight another bill and repeat until either the credit is used up or the bills are all paid)
  4. Continue as usual and pay selected bills

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K. Kersey
July 5, 2012, 10:04 am

Quickbooks 2012 will not let you overpay a vendor.

K. Kersey
July 6, 2012, 4:03 am

Yes, true it does. But my problem was that the amount was $334 in quickbooks and I saved the information but when I went to pay it through online banking I transposed the number to $343. I noticed the error when I went to do a bank reconciliation. When I went back into Quickbooks to updated witht he amount that I did pay it would not let me pay more than the amount that was originally owed.

November 5, 2012, 5:22 am

What about receiving the credit back to a credit card? This process you describe only works if the vendor refunds you with a check. Please advise. Thanks

January 18, 2013, 4:43 am

Thanks a lot your answers are very simple and easy to follow.

September 30, 2013, 1:53 am

This is fabulous and exactly what I needed to figure out! Thank you so much!

October 3, 2013, 3:23 am

So cash gets credited with the overpayment. Then to which GL account will the overpayment debit be applied to? Thanks

October 14, 2013, 5:39 am

Thank you for your help. It never occurred to me to check and see if a bill had been created. So simple.

November 11, 2013, 4:20 am

I found your thread, and hope you can help. I paid a vendor twice on my own error. They deposited the check, so they cut me a new check to repay me the funds. While your post seems to be what I need, it doesn't make sense to me. In step 1, you suggest to go to "pay bills" and select the bill I over paid….however, since it was already paid, it's no longer in the pay bills list to check.

Then again following option B, the vendor name is not in the list at (vendor > pay bills).

Hope I am making sense here…..thank you!

January 21, 2015, 12:00 am

hi, mine is a retail shop.. my problem is this:

Actual total cash sales: 141.39
Actual Cash on Hand: 142.00 (deposited)

Obviously there is an overpayment. What do I do? transaction is cash sales.

March 16, 2015, 4:35 pm

I was wondering how you would handle the following: A vendor was paid (in 2014) for a invoice that should not have been paid. As it was the end of the year it was booked against the expense account as a credit for $2000. Then an asset account was debited for the same.
Now 3 months later we received the refund but it was for more after the vendor did some research. So lets say we received a check for $3000 now,
What is best way to handle refund check? Thanks for any guidance and your time.