Issuing refunds for overpayments

2 minute read time.

It seems like most of our Accounts Receivable time, after sending out invoices, is devoted to chasing down payments. For this, the blog Bad debts management and AR Write-offs comes in handy. Every once in a while, customers don’t just pay us, but they overpay us. Let’s look at what we can do with overpayments.

Overpayments can be dealt with in several ways. You can apply the overpayment to an existing invoice if your agreement with the customer allows it. The customer may instruct you to leave it on account for application against a future transaction. What if you are no longer doing business with the customer or the customer requests a refund of the overpayment?

One option is to create a BP customer invoice equal to the overpayment and match this invoice to the overpayment. Then, create a BP supplier invoice equal to the amount of the overpayment. Finally, create an AP check to pay this invoice as you would any other supplier invoice.

Another option is to directly issue a check against the overpayment.

Say we have a $5,000 invoice and receive a $6,000 payment which we record in Payment/Receipt Entry (GESPAY) using Transaction Type Check Receipts (RECCH). This function is found under A/P-A/R Accounting, Payments. The $1,000 overpayment amount has an Attribute of REC and no Type or Entry values.

The Financials, Journals, Journal Entry (GESGAS) shows that the $1,000 overpayment is now sitting in the AR account 12100.

If we go to Financials, Matching, Manual Matching (LETTRAGE), select Account 12100 (AR), the $5,000 invoice and the $5,000 portion of the payment are under Matched with the Matching code A.

The overpayment amount of $1,000 is all by itself under Not matched.

How do we generate a check for the overpayment while the $1,000 sits in the AR account?

It’s back to A/P-A/R accounting, Payments, Payment/Receipt entry (GESPAY). Select an AP payment entry type to begin a new Payment/ Receipt entry. For this example, I’ll use PAYAT.

Select 'New' and enter the appropriate Site, BP Customer (1), and Bank information. Notice, that the Account (2) is the AR account even though this is to be an AP check payment. The BP amount is the overpayment amount of $1,000 (3). On the grid, the Attribute (4) is Pay and Type (5) is RECPT.

Before we proceed, we need to review the Type found under Setup, Financials, Document types (GESGTE).  Type must have Open item management checked. If not checked, you won’t be able to drill down into Entry to select the receipt journal or type in the receipt’s journal entry number.


Once you type in or use the lookup to retrieve the overpayment receipt, the overpaid balance auto-fills in the Amount and Allocated to BP fields. You can now save, print the check and post.

Next, the payment and overpayment can be matched in Manual Matching.

 I hope this helps you manage your overpayments.

Take care my X3 friends. Stay safe!