Overpayment to suppliers

This article will help you resolve overpayments to a supplier. It outlines the different supplier overpayment scenarios that can occur, and how to account for these.

Why do supplier overpayments happen?

From time to time, you may need to resolve an overpayment made to a supplier. This may be needed when:

• The payment amount was set up incorrectly when making payments;
• A supplier invoice was entered twice;
• A supplier invoice was paid via a business card payment, but entered as an invoice to pay.

How to reconcile a supplier overpayment

Where an overpayment occurs, the outgoing overpayment will need to be reconciled as an 'Invoice Payment' with documentation relating to the overpayment uploaded as the 'receipt'

Below are various scenarios that may arise when a supplier overpayment occurs, and details on how to process these within ExpensePlus.

Scenario 1: The supplier repays the money

Example: £300 was overpaid. The supplier refunds £300.

Where the supplier refunds the money back into your organisation's bank account, you can simply match this incoming amount within the bank matching screen as a 'Supplier Refund'.

Select the transaction in the left-hand table, click the '+' button that appears, and select the 'Supplier Refund' option from the drop-down menu.

Scenario 2: The amount is deducted from a subsequent invoice, reducing the amount to be paid to the supplier

Example: £300 was overpaid. The next supplier invoice payment is £400. A payment of £100 is made to the supplier (to cover the £100 of the invoice that wasn't covered by the overpayment).

Where this happens, when entering the invoice, enter the full invoice amount on the first line of the budget details section (£400), and enter a second line for the amount previously overpaid as a negative amount (-£300).

This will reduce the total amount to pay to the amount not covered by the overpayment.

Scenario 3: The amount is deducted from a subsequent invoice, and a partial repayment is issued by the supplier

Example: £300 was overpaid. The next £100 is covered by this overpayment. The supplier issues a repayment for the remaining £200 overpaid.

When the £200 is received into the bank, within the View Statement screen, split this bank transaction into £300 paid in, and £100 paid out.

Reconcile the £300 paid in as a 'Supplier Refund'.

Reconcile the £100 paid out as an 'Invoice Payment' and upload the invoice relating to that amount to the purchase.

Scenario 4: The amount of the next invoice(s) exactly matches the amount overpaid

Example: £300 was overpaid. The next two invoices are for £150 each. No money is paid back by the supplier or to the supplier.

Within the View Statement screen, manually upload the following bank transactions by clicking the 'Upload Transactions' option.

Select the 'Upload Transactions manually' option in pop-up.

Add a paid out transaction for the amount of the overpayment, and paid in transactions for the supplier invoices this overpayment was used to offset.

Overall, the paid in and paid out totals should match, so your bank statement balance won't change.

Reconcile the paid in amount as a 'Supplier Refund'.

Reconcile the paid out amounts as supplier invoices, and upload the corresponding invoices to the transactions.

Scenario 5: The amount is deducted to offset against the payment of a number of future invoices

Example: £300 was overpaid. The next 3 invoices are for £100, £150 and £150. A payment for £100 is made to the supplier (to cover the £100 of the 3rd invoice that wasn't covered by the overpayment).

There are two ways to manage this scenario:

• Option A: Enter an invoice payment for the supplier overpayment amount. Enter the subsequent invoices issued by the supplier as invoices to pay, but leave all of these on the payments screen until the total of the invoices entered is greater than the supplier overpayment amount. Then make a payment for the difference, and mark all as paid (this is a good option where you create accounts on an accruals basis, and the invoice overpayment amount is significant).
• Option B: At the point the overpayment has been 'used up' to pay future invoices from the supplier, simply pay the difference owed, and within the View Statement screen, split the bank transaction into the different invoices this relates to.

Option A

Enter a negative invoice for the overpayment amount, dated the same date the overpayment occurred.

Process this up until the Payments screen, but don't mark it as paid.

Enter invoices from the supplier as invoices to pay, and also process these up until the Payments screen and don't mark them as paid.

When the total of the invoices for this supplier exceeds the total of the overpayment, make a payment for the difference, and mark all invoices relating to the supplier as paid.

Within the bank reconciliation screen, reconcile the outgoing bank transactions to all of the invoices relating to this supplier on the right-hand table

Option B

At the point the overpayment has been 'used up' to pay future invoices from the supplier, simply pay the difference owed out of your bank account (without processing this through ExpensePlus).

Within the View Statement screen, split the bank transaction into the different invoices that it relates to.

Reconcile the paid in amount as a 'Supplier Refund'.

Reconcile the outgoing amounts as 'Invoice Payments' and upload the corresponding supplier invoice documents to these purchases within the Receipts screen in ExpensePlus.

To help you better understand the Purchasing module as a whole, please visit the module overview page here.