How to handle Customer Statement of Account

scout_treasscout_treas Member Posts: 23

OK - here is the scenario.

I have a customer that after viewing the Customer Statement of Accounts shows that they have a credit balance - money that they have overpaid.

How would you handle this?

My thought would be to set up a new account under Chart of Accounts / Liabilities / Customer Prepayments and Customer Credits. How would I show under the Customer Statement of Accounts the movement of the credit balance into the newly created Customer Credits account?


  • scout_treasscout_treas Member Posts: 23

    Just seeing if anyone has any suggestions on how to handle this.

  • ZoeCZoeC Administrator Posts: 389 admin

    Hey @scout_treas! My apologies for the delay in response time. So let's say you invoiced a customer for $100 and they paid you $200. You now have $200 sitting in your bank, but only $100 of it is accounted for. So what you're going to do is start off by applying a payment of $100 to the original invoice in order to close it off and keep the customer's balance at zero.

    But what about the extra $100?!

    Great question! So now we're going to create what's called a deposit holding account. The reason for this is because at this point, since you are holding onto the overpayment in order to bring it forward against a future invoice, we need to account for the cash for the time being, and as of now, we can treat the overpayment as a deposit for future services rendered.

    1. From the left navigation menu, choose Accounting > Chart of Accounts. On this page, select Add a New Account.

    2. A menu will pop up. Select the Income tab, and in the search box, enter ‘Other Income’. Once the search populates, click on the Other Income and name the account ‘Deposit Holding Account’

    3. Next, go to Accounting > Transactions. Click Add Income at the top right of the page to create a new one.

    4. For this transaction, you may want the Description column to include that this was an overpayment on invoice no. xxxx, the Category should be your Deposit Holding Account, and the Account to be the bank account to which you received the payment, i.e. your Checking Account.

    5. Once you invoice your customer again, don't send the invoice to your customer right away. Let's say the invoice is for $500 this time. Click the drop-down arrow to the right of the Deposit Holding transaction from step 4 and choose Create Invoice Payment. In the menu, select the new invoice (the one for $500) and click Create Payment. Next, go to Sales > Invoices and you should see that the Status column for that invoice has updated to Partial, since you will have just applied a partial payment, bringing the balance of $500 down to $400.

    6. Now go to Sales > Invoices and find the invoice you just made a partial payment on. Click the downward arrow on the right and click Send. Your customer will get a copy of the invoice with a balance of only $400. Once they pay that remaining $400 balance, you will notice that the balance on their customer statement is zero, and you will no longer have any cash unaccounted for in your bank account.

    I hope this helps! :smile:

  • scout_treasscout_treas Member Posts: 23

    Thank you for the response. That was the general thought that I had. Would I need to create a 'Deposit Holding' account for each customer that has a credit balance? If not, how would I account that they have a credit balance or not?

  • Ryan_WRyan_W Administrator Posts: 461 admin

    Hey @scout_treas, I guess that depends on how many customers are overpaying you regularly. If it's not that many, then you can just continue using a single Deposit Holding account, and then refer to their past invoices to know how much to carry out of the holding account and attribute to the next invoice. However, if you have a number of specific customers who do this, it would be equally as effective to designate a deposit holding account for each of them.

  • OkapiOkapi Member Posts: 4

    If I understand the concern of Scout_treas very well; I think he wants to know how can one display that amount which has been put in a deposit account on the customer statement. When you send a statement to you clients the statement should not show a balance of 0.00. It needs to show amount overpaid, otherwise he is going to query the accuracy of the statement.

  • scout_treasscout_treas Member Posts: 23

    @Ryan_W @Okapi
    Hello - Okapi - you are correct.
    I feel that any invoice that is created is tied to the customer by the account number. This way any overpayment that is done, is automatically associated with that account number, and customer. This would eliminate the need to create a holding account for any overpayment.
    When an invoice is created for that customer, based off of the account number, it would first display any previous balance, then list any additional items, and then the balance due - taking into account any overpayments or not.

    This should not be so difficult to handle.

  • JamieDJamieD Administrator Posts: 1,091 admin

    @Okapi @scout_treas So essentially it sounds like you are looking for something similar to a credit note (if not, exactly like that). This isn't something that's currently offered in Wave, however, there are some plans that may include implementing this in the near future. Please take a look at this thread here:

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