Brought to you by

CX Top Tips: Overpayments and how to manage them using Xero

Posted 8 months ago in Advisors by Leslie Alldridge

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 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.
  • 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

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 overpaid you a new invoice is created and 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.

We have some great Help Centre pages that step through Overpayments in Xero. You can check them out here.

You can reach out to Xero Support anytime by following the steps in this video.

This is the first in our CX Top Tips series. Stay tuned for more CX Tips coming soon.

Leave a reply

Your email address will not be published. Required fields are marked *