Receive Payments

Manage customer credits and overpayments in QuickBooks Online

When customers pay you more than they owe, or when you need to move funds between customer accounts, QuickBooks Online keeps track of the balance as a credit. We can help you apply these credits to open invoices, handle merchant fees, write refund checks, or transfer credits between customers.

Apply a credit to an open invoice

If a customer has an existing credit and you want to use it to pay down an invoice:

1. Select + New.
2. Select Receive Payment.
3. In the Received from dropdown, select the customer.
4. Select the Discounts and credits button.
5. In the Credits tab, select the credit(s) you want to apply.
6. Select Done.
7. Verify the payment amount is correct, then select Save and close.

Handle credit card payments with merchant fees

Sometimes a customer pays the full invoice amount, but your bank deposits the net amount after deducting merchant service fees. To record this correctly without leaving a small balance due:

1. Select + New.
2. Select Receive Payment.
3. Select the customer from the Received from dropdown.
4. Select the checkbox for the invoice being paid.
5. Select Discounts and credits.
6. In the Discount amount field, enter the fee amount.
7. In the Discount Account dropdown, select your Merchant Account Fees expense account (create a new expense account if needed).
8. Select Done.
9. The Payment column should now equal the net deposit amount. Select Save and close.

Write a refund check for an overpayment

If a customer has overpaid and you need to refund the money, do not use a credit memo. A credit memo is for goods returned or services not rendered. To refund an overpayment:

1. Select + New.
2. Select Check.
3. In the Bank account dropdown, select the account you are paying from.
4. In the Payee field, enter the customer’s name.
5. Enter the refund amount.
6. Go to the Account details section (or the first line item).
7. In the Account dropdown, select Accounts Receivable.
8. Select Save and close.
9. Now, link the check to the original credit:
   • Select + New > Receive Payment.
   • Select the customer.
   • You will see the refund check in the Outstanding Transactions or Credits section (depending on your view). Select it.
   • Select Save and close.

Transfer a credit from one customer to another

If a credit was accidentally applied to the wrong customer, you can move it using a journal entry.

1. Select + New.
2. Select Journal entry.
3. Enter the date.
4. Line 1:
   • Account: Select Accounts Receivable.
   • Debit: Enter the amount of the credit.
   • Name: Select the customer you are moving the credit from.
   • Memo: Enter a note, such as “Transfer credit to [Customer Name].”
5. Line 2:
   • Account: Select Accounts Receivable.
   • Credit: Enter the amount of the credit.
   • Name: Select the customer you are moving the credit to.
   • Memo: Repeat the note.
6. Select Save and close.

Record tips included with a payment

If a customer sends a check that includes a tip, you can record it directly on the invoice or via the bank deposit.

Method 1: Add to the invoice

1. Create a Service item called “Tips” and link it to an income account.
2. Open the original invoice and add this “Tips” item with the tip amount.
3. Select Save and send or Save and close.
4. Receive payment for the full amount (invoice + tip).

Method 2: Use the Bank Deposit

1. Select + New > Bank Deposit.
2. Select the payment for the invoice in the Select the payments included in this deposit section.
3. On the next line, under Add funds to this deposit:
   • Received from: Leave this blank.
   • Account: Select your Tip Income account.
   • Amount: Enter the tip amount.
   • Ref no./Memo: Enter a description.
4. Select Save and close.

Fix a deposit linked to the wrong customer

If you recorded a deposit directly to the bank account without receiving the payment first, the customer link is missing. To fix this without breaking your bank reconciliation:

1. Select + New > Receive Payment.
2. Enter the customer name and the payment amount.
3. Apply it to the correct invoice and select Save and close.
4. Go to Lists > All Sales (or select the Sales menu) and find the deposit.
5. Open the deposit and select the Payments button (or look for the section showing payments to be deposited).
6. Add the new payment you just created to this deposit.
7. Select the line in the deposit that was recorded incorrectly (the one without the customer link) and press Ctrl + Delete (or select the trash icon) to remove it.
8. Verify the total deposit amount matches your bank records.
9. Select Save and close.

Write off bad debt

To write off an invoice that a customer will not pay, use a credit memo linked to a Bad Debt expense account.

1. Create a Service item called “Bad Debt” and link it to a Bad Debt Expense account.
2. Select + New.
3. Select Credit memo.
4. Select the customer.
5. Add the “Bad Debt” item and enter the amount to write off.
6. Select Save and close.
7. Apply the credit memo to the open invoice:
   • Select + New > Receive Payment.
   • Select the customer.
   • Select Discounts and credits and apply the credit memo.