Supplier payment greater than amount owing

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How do I enter a supplier paymant against invoices if the amount paid was more than the invoice value
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Arthur Bortz

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Posted 4 years ago

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Jason Hollis, Head of Product

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Hi Arthur, just to clarify, was this the amount YOU PAID. eg. You have supplier bills to the value of $1,000 and you paid $1,200 to the supplier accidentally?
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Arthur Bortz

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Yes, I overpaid the supplier
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Fizzer

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Hi Arthur, you will probably get a credit or refund of the difference from the supplier. I am not sure you can process them onto the same bill. I personally do a separate entry for returns as Reimbursment etc.
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Jason Hollis, Head of Product

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Thanks Arthur. 

As Fizzer mentions, you can certainly request a supplier credit or indeed a refund, so the first question is "do you want a supplier credit for the difference, or was it a nominal amount and you will square it up on your next purchase, therefore a CREDIT?

Let's assume CREDIT. Let's also assume that the supplier is using an accounting system, therefore the overpayment will automatically be handled as a credit at their end. Finally, let's assume you use BILLS in Reckon Accounts already to track purchases. Please advise if any assumptions are incorrect.

In Reckon Accounts, you need to record the FULL PAYMENT so you can reconcile what actually left your bank account. Therefore follow these steps, filling in the blanks such as REF / MEMO etc.. as you wish:

1. Create a cheque
2. Make the Payee the supplier you overpaid
3. The Expense account is your payables account for this supplier eg. Accounts Payable
4. Enter the suppliers name in the Customer:Job column
5. Save
6. Go to the pay bills window and mark the bills you meant to pay
7. When each individual bill is highlighted you will see a credit amount available. Apply this to each bill in turn
8. When the final bill is paid you will have a credit balance. Apply this FIRST to a bill(s) next time you pay this supplier. Therefore you will physically pay (next time) the bill amount less the credit. Therefore over 2 payment cycles you will be all squared up.

See examples below

(Edited)
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Cannindah

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Such a well explained answer Jason.  What if you don't use the BILLS function in Reckon but rather use the 'Write Cheque' function to process payments.  Our file is run on a Cash basis.  What is the correct procedure to use in this instance? Thanks
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Jason Hollis, Head of Product

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Hi Cannindah,

The cheque full amount must stay the same (as what you actually paid) of course otherwise your bank GL account won't reconcile. Also, please take appropriate advice from a registered professional in regards to how this may effect prior BAS periods. 

For this example we'll assume you made the mistake (over-payment) in the current BAS period.
  • Create a cheque for the PAID amount
  • Enter the actual expense on the first line
  • Enter the over-payment against accounts payable on the second line (no tax code). Remember you need to also include the supplier under Customer:Job. 


  • When the supplier invoice comes in next time, add the accounts payable credit as a -ve amount (I'd still prefer to use a bill at this point) and underpay the invoice. 
** Using a bill at this stage also has the advantage of warning you that you have an outstanding bill when you go to pay ANZ again - this reminds you to use the credit.



  • Regardless of the method, you'll then need to go to Pay Bills and clear both the over-payment (credit) and underpayment (or bill - if you used that method). 


nb. You don't need to use Accounts Payable as your over-payment account; you can create an asset account called Accounts in Credit for example. The downside of this is - you have to remember to use that credit, whereas incorporating a bill does all of the reminding for you. You can also use BILLS once (for this purpose) and never use them again. 
Hi Arthur

If you have overpaid a supplier, just go to paybills as usual, tick the bill/s that you were paying, the last column shows the default amount of the bill that is due or left to pay against that bill.

if one bill involved override the amount in the last column to the amount you actually paid i.e if you paid $1200, then enter $1200 against a $1000 bill...

If multi bills, tick each bill, then on the last bill again override the amount to what you overpaid.

enter date & bank details as usual then save.

This will automatically put a credit in the supplier, without doing complicated journal entries.

the credit will remain in the system - if you order more stock then the credit can be applied to the next bill  you enter (you will be asked this at the time of entering a bill "do you want to apply the credit").

If the supplier gives you a refund then enter the refund via "make deposit".

Received from = supplier name
Account = Accounts payable
Memo = "refund from xxxxxx"
Amount = amount supplier refunded

This will place put the deposit into the  bank account you chose for the deposit and enter the amount under the supplier at the same time, wiping out the credit.
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Jason Hollis, Head of Product

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Just re Kim's comment, if you run your file on a CASH basis for BAS then this method is not recommended as it can, in some (rare) circumstances, cause an incorrect reporting of GST paid on the BAS reports.

Certainly easier and if the company file is set up on Accrual then no issue.

Thanks for adding the refund aspect @KIm.