How do you reconcile a credit balance or overpayment from a customer?

• A. Apply the credit via Receive Payment or issue a Refund Receipt if a customer has overpaid.
• B. Delete the payment.
• C. Create a Journal Entry.
• D. Create a new invoice.

Answer: (A)

When a customer has a credit balance or overpayment, you clear it by handling the credit through the customer records rather than altering transactions arbitrarily. In practice, you apply the credit to any open invoice using Receive Payment and selecting the available credit to apply to that invoice. If there are no outstanding invoices, you issue a refund receipt to return the funds to the customer. This keeps Accounts Receivable accurate and reflects the actual cash movement.

Deleting the payment would remove the transaction history and leave the customer balance unresolved. Creating a Journal Entry would bypass the customer-level record and could misalign AR with cash accounts. Creating a new invoice doesn’t address the overpayment and would create more confusion about what’s owed.