There are times when a customer accidentally or intentionally overpays an invoice or prepayments are part of your business model. To account for these transactions, you can issue your customers a credit memo to document receipt of the payment and apply it to a future invoice.

Before you’re able to tag incoming overpayment and prepayment transactions, you’ll need to create either the “Overpayments” and/or the “Prepayments” in your Settings:

First, navigate to Settings, and select Categories

Type and select the “Overpayments” or the “Prepayments” category depending on your needs. This’ll prefill the “Parent Category” information.

Click “Save”, to save your new categories.

On the incoming payment information, tag the transaction as a “Prepayments” or “Overpayments”.

Create a credit memo for the same amount for the customer

Apply the credit memo to a future invoice by matching it as a payment after creating the invoice.

To cancel a credit memo, click on the more menu icon on an open credit memo, and select cancel credit memo. Note that only open credit memos can be canceled.

Any canceled credit memos can be found in the “Canceled” tab. This tab can only be seen if you have canceled credit memos.