Overpayments against a sale can be refunded to the customer or converted into customer credit, which can then be used against future invoices.
NOTE: This method can also be used in order to refund VAT that has accidentally been charged to customers.
- Set up Accounts and Account mapping
- Processing a sale (required)
- Customer credit notes and refunds (recommended)
- Customer credits (recommended)
Table of Contents:
- Convert overpayment into a customer credit or a refund
- Use customer credit against another invoice
- Overpayments in Xero
Convert overpayment into a customer credit or a refund
In our example, a customer has made an overpayment of $400 on a sale of $2140. Here is how to either refund the overpayment amount directly to a customer, or convert it into a credit to use against future invoices.
NOTE: You will need to create a refund service item in your inventory in order to issue the refund. Do this before continuing. See Create a refund service item for more information.
- Go to the Invoice tab of the sale that has been overpaid.
- Under Payment, enter the exact invoice amount, not including the overpayment.
- Save the sale order.
- Create a sale credit note for the customer. (Sales → New →Sale Credit Note). Add the refund service item to the sale credit note and the value of the overpayment to the price. Quantity is 1.
- Authorise the sale credit note. This will cause the Refund section to appear.
- Select Customer Credit to open a popup window where you can enter the value of the overpayment. Save for it to be added to the Refund section. The customer credit can now be used against other invoices. See Use Customer Credits for more information.
- If you want to refund the customer directly, simply click Refund instead of customer credit in step 6.
Create a refund service item
You will need to create a service item in your inventory for refunds to create credit note sales that are not linked to a specific product or service sold by your organisation.
- Navigate to Inventory → New → Product/Service.
- Create a Service or non-inventory item called Refund and Save your changes.
Overpayments in Xero
If using Xero, all overpayments must be handled in Xero, not through DEAR. DEAR cannot send overpayments to Xero. Attempting to handle overpayments in DEAR will cause synchronisation issues.
- If a payment has already been added in Xero, undo it, and leave it as a draft invoice. If no payment is applied in Xero this step can be skipped.
- In DEAR, do not apply a payment to the invoice. Authorise the invoice in DEAR without adding a payment then sync to Xero.
- Next, you will need to add the payment, including overpayment, in Xero.
- The amount equal to the invoice will sync to DEAR and close out the invoice in DEAR. Xero will convert the overpayment into a credit which can be applied to in any related Xero invoice in future.