Recording Customer Overpayments for Cash Refunds Instead of Credit

The customer sends a check for more than the total on the order, or otherwise overpays on goods or services. When a cash refund is desired rather than a credit on the account, how does this get recorded? 

When an overpayment on a prepayment occurs, the following steps need to be taken:

  • Create a Credit memo for the overpaid amount. Use a Service item on the Credit memo. When creating the Service item, use Customer Prepayment as both the Sales and Expense Accounts.
  • On the Customer card, check the Vendor checkbox (we need to make a payment).
  • Create Credit Memo for the overpaid amount.
  • Create a Service item with Customer Prepayments accounts as both the Sales and the Expense Accounts.
  • Create a Payment (from the Bank Menu) .
  • Enter the Customer in the Vendor field on the Payment.
  • Create a Cash Receipt.
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