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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.

    July 6, 2012, 12:50 am

    Hi K. Kersey,

    Are you able to give a bit more detail or send me a screen shot to greg at I have QuickBooks 2012 and I just tried to overpay a vendor and it worked just like the instructions I wrote above.

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.

    July 6, 2012, 4:06 am

    Ok, gotchya. I think the simplest thing to do would be to delete your payment in QuickBooks. Go to "Write Checks", find the transaction, and delete it. You will now be able to repay (and overpay) the bill by going to "Pay Bills". Let me know if that works.

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

    November 9, 2012, 1:28 am

    Hi Jimmy,

    If you're receiving a refund to your credit card, you still do step 1 by overpaying the bill. The second step is to go to "Enter Credit Card Charges" and make sure to use to select "Refund/Credit". For the account, use "Accounts Payable" and for the "Customer:Job", use the name of the vendor that you overpaid.

    To double check you did it correctly, go to the vendor from "VendorS Center" and you'll should see that the credit is used up.

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 3, 2013, 12:09 pm

    Hi Lgel, this is what happens when you overpay.

    Debit – Accounts Payable
    Credit – Cash / Bank account (whichever account you received the money to)

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!

    November 11, 2013, 11:00 am

    Hi Derek,

    In your case, you can first use the "Write Checks" function to write a check to the vendor. Make sure under "Customer:Job" to use the Vendor's name. Also make sure to use the "Accounts Payable" account for the account.

    Then go to "Record Deposits" and receive the refund. For "Received From", use the vendor name and for "From Account", use the "Accounts Payable" account.

    Next, go to "Pay Bills", find the bill, and pay it using the Credit (by using the "Set Credits" button).

    Make sense?

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.

    February 12, 2015, 4:17 pm

    Hi Pong,

    What you do depends on how you usually record the deposit. Do you do up a Sales Receipt or an Invoice? And are you using the Record Deposits Window? If it's a Sales Receipt, I would just bump up the sales to be $142.00 instead of $141.39. Use whatever revenue account in your chart of accounts that seems appropriate (it could be just a general sales account, or if you use an Other Revenue account, that may fit). If it's an invoice that you then deposit using the Record Deposits window, you can add a line item and categorize the extra $.61 to a revenue account (again, a general sales account or perhaps an Other Revenue account).

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.

    March 19, 2015, 9:02 pm

    Hi Waltermpls,

    I don't know quite what to say, as the first transaction you entered doesn't make sense to me. Usually, if you overpay a vendor and it's booked as an asset, as you said, then the transaction would be something like:

    * Prepaid Expenses (asset) DR $2,000
    * Bank Account (asset) CR $2,000

    There's no expense account involved in that transaction (even though there is expense in the "Prepaid Expense" name).

    If your vendor then gave you a $3,000 refund check, that transaction would be something like:

    * Bank Account (asset) DR $3,000
    * Prepaid Expenses (asset) CR $2,000
    * "some liability account" (liability) CR $1,000

    Of course, I don't think you care about the debit and credit transactions, but that's what you would do on paper. In QuickBooks, what you do depends on how you recorded that first transaction, the $2,000 overpayment? Can you let me know? In the end, you now owe the vendor $1,000, since they overpaid the refund. So you have a $1,000 liability.

December 9, 2013, 7:02 am

Hi JD13,

I would talk to your accountant / bookkeeper as I can't give advice regarding your taxes / payments. Sorry I can't help you out.