Over-payment to a bill / a.k.a Vendor credits
hgomezc
Member Posts: 18 ✭✭
Hello, I'm a new user to Wave and I wonder how to deal with an over-payment to a bill.
If I have a bill for 500 and I've paid 700, the bill's balance shows (-200) because of the excess payment. This is good. However, if I enter a new $300 bill from the same vendor and apply a payment to it, I don't have a clue (unless I remember) that I have credit. If I choose to pay 100, the bill still shows a pending balance of 200. So, obviously the credit was not applied to it.
However, the accounts payable report for the vendor is correct, no pending balance there. My guess is that this is because the report takes into account all bills minus all payments, period.
The problem is that the bill still appears as overdue on the Dashboard and thus cause confusion.
I think it would be great to have the overpaid amount in an automatic vendor credit account and be able to apply them to newer bills.
I hope this helps to make this already great software even better.
Regards
Comments
Hello, I'm back to share how I ended handling the above scenario as this may help others.
I created a new "Credit Line" account called "Vendor credits," this account will hold all excess payments that I make from time to time.
Then I registered an Income for this account and categorized it as "Refund received from a Bill" entering in the amount box the excess amount paid. Obviously, you need to select the bill where you made the over-payment.
Afterward, I've applied a new payment to the second bill using the "Vendor Credit" account as the payment source.
Things to be cautious about using this method if you do a lot of over-payments (which is not my case):
Obviously, this procedure above is a workaround while the awesome wave team creates a more elegant solution to keep track of such things.
Hope this helps
Hi @hgomezc.
Yes, that's a fantastic workaround to Wave's lack of a vendor statement to mirror the customer statement. I think you'd be wise to triple-check with your accountant, but I got a few sets of eyes on your work on my end and it makes a lot of sense to us.
I'd actually love to pick your brains about a vendor statement. Do you typically have a lot of outstanding bills to keep track of? I can absolutely see the use of a feature like this.
If you'd like to discuss it a more, I recommend reading this post and making a feature request under the Wave Features category.
Let us know what your accountant says!
Hello @Alexia and @hgomezc !
This happens frequently here and I don't know how to manage that. I am not a professional bookkeeper, so I did what I could.
I used to make it this way:
In the transaction section: Expense of 5$ in Prepaid Expense in the checking account.
In the Journal Transaction section: credit the 5$ Prepaid Expense and "x"$ checking account, debit the expense category and HST payable.
However, I realized that caused problem on the Sales Tax Report, as the expense amount doen't show up in the total of the Sales Tax Report (Taxable Amount, receivable), but the tax amount does appear.
Unfortunately, I don't understand how to use @hgomezc method. I would really be interested in an easy way to solve this. I thought that if the "Prepaid Expense" account could be used as a Payment Account, it could be usefull.
Anyhow, I will closely follow this discussion
Thanks for bringing it up! (and excuse my English... not my first language)
Hi @GroJ.
I think what you're missing from @hgomezc workaround is that he made the Vendor Credit account into a Credit Card or Loan account, instead of an asset account under that pre-paid expense category.
If you do that, everything else should fall into place. You'll be able to make a payment from that account to your bill while keeping all your numbers in order.
Hi @GroJ,
@Alexia is right to the point on her last post; the key is on the type of account you use to hold the overpayment.
I'm not a professional bookkeeper either, and there are some things that they do that I don't understand or that do not give me the information as I need it, that's why these things need to make sense to me as a business owner.
I hope you do find a way that fits your needs. Let me know if I can be of further help.
A few months back my answer would have been different, in other businesses I have, this thing of overpaying an Invoice rarely happens because I only consume services from my vendors. But in my new line of business, this is going to happen frequently, mainly because now I'm receiving goods and some are even perishable. So we may get DOA items or even incomplete orders that were already paid for, so now I have to keep track of vendor's credits.
BTW I'm not using wave for bookkeeping, but as a dashboard, to have a quick glance at my business' finances. I've been using another popular tool for several years for the other businesses; however, for reasons irrelevant to this thread, I've decided to try wave for a change, and I can see a lot of good things on it.
That's really nice to hear, @hgomezc!
You can expect a few features to make your life easier, then. The big one, I think, will be the ability to tag vendors to transactions, making it easier to keep track of your accounts payable with specific vendors. I can't tell you exactly when that feature will be implemented, but it's in the work. I know that I, for one, am pretty excited to see it released!
We're always adding new features and looking for new ways to improve. If you have any insight on ideas or improvement, you're more than welcome to start discussions on the matter under Wave Features. If you do, I'd recommend reading this post first.
While this might be a good workaround for most I have a bit of an issue.
While it doesn't happen often, I do have credits from vendors for returned items. The issue I have is that I can no longer split my bank transactions that happen weekly from these vendors. When the vendors withdraw the funds from my bank, it is done for several invoices at a time which include invoices and credit notes. Prior to the upgrade I was able to just create a negative bill for the credits (which I can still do) and was then able to make bill payments while splitting the single bank transaction that were for both the negative and positive amounts. Now I am not able to split the transaction with the bills that include a credit by making bill payments which is important for me since I rely on the bills to categorize the various purchased items.
Thoughts?
Hi @2036123AB. This feature is no longer available in Wave for the time being (being able to add a negative amount to a bill payment) -- however, what you can do is categorize these specific transactions as a 'Refund for a Bill Payment.' You will also be able to split these particular transactions (if you have a large deposit amount) and then make sure they are all categorized as that refund for bill payment (if multiple come in at once).
I still can't categorize the transactions as the credits come in the same bank transaction as debits from other bills which are much larger than the refund. When trying to split the transaction it is a withdrawal and thus does not allow me to categorize the credit as refund for a bill is not available.
@2036123AB In the case that the transaction you are trying to split is an expense (the bulk withdrawal for your bills) -- this can't be split with an income transaction. In the classic software, when you are transaction splitting, it creates an entirely new transaction in Wave which can then be categorized because it's a separate entity. The same will need to be done here (you will need to create a transaction manually -- adding the income and categorizing it as a refund for bill payment).
Hi
My business works on a commission basis. Recently, I have had to pre-purchase some products from one of my vendors. At the same time I have had sold a bunch of their products and needed to refund some of the prepurchased products. Not sure how to put this into wave to depict this.
Expample of what happened.
1. Pre-purchase $100 worth of products - Make a bill in Wave - Bill 001
2. Return products worth $70- So I want a refund for $70 for the same Bill 001.
3. Sell products for same vendor so I owe them $200 (which I make Bill 002 for).
4. Vendor asked me to deduct what she owes me from the next payment I make to her. So I paid her $200-$70= $130 which is what I owe her.
My problem is that if I put in a refund of $70 against Bill 001 it shows I still owe the vendor $70 for bill 001. And if I put in $130 for Bill 002 it shows that I still owe the vendor $70 for bill 002 as well.
How do I put this in Wave correctly so I don't own money to anyone and everything balances out? How do I show only one payment and balance out my vendor who is my creditor and debtor?
Thanks
Hi All,
I wish to confirm that creating the "Vendor Credit" account under a Credit Card or Loan account is correct, versus under Assets.
My gut feel says the vendor credits should be treated as assets but I am not an accountant though.
In another discussion: https://community.waveapps.com/discussion/comment/6029#Comment_6029, he created under Assets.
I am confused now
Thanks!
Hong
Hey there @kkjjww46
I'm curious if you've experimented with adding negative values to your bills (and invoices) to reduce the expense (or income) owed to you. This might achieve what you're looking to do while still reconciling your accounts.
Let me know if this works out for your particular transaction! Otherwise reach out again
Have a great weekend.
Hi @hong
I think the major difference here is that the liability account would be appropriate as this is technically money owed. There’s also an expected payments to vendors sub-category under liabilities which may help.
Let us know if you need any further clarification.
Hi @BarsinA,
I used the below account under Assets and its working for me right now.
When it comes to recording it, I will enter a manual entry into "transaction" to record the overpayment.
And when it is time to use the "credits" to make a payment to another future bill, I will enter another manual entry into "transactions" to do the Bill Payment.
That worked. Thanks so much.
Hi @hong.
Had the same issue and solved it as you showed here. It worked but now on the balance report it shows the same amount owed to us by the vendor, as an accounts payable under Liabilities. Since its money owed to us, it should not show under accounts payable. Guess i did something wrong..?
sorry meant NOT show under accounts payable...
I had a customer over pay me for an invoice and asked me to hold the credit on the account and apply it to her next order. So when I paid the invoice I applied the full payment including the over payment. When you go into customer statements it shows the credit. I then invoiced her for her new order and when I apply the payment for this order less the credit it still shows a balance remaining on that invoice. Is there some way of applying this credit without showing it as another payment?
Hey there @StaciWied
I've merged your conversation into this thread where a lot of other users are discussing dealing with vendor credits and overpayments. Have a read through to see if you can glean any information from other users past answers. Be sure to also check out our Accounting for Overpayments help center article as well!
While I appreciate your response I don't feel that merging this with a vendor credit thread is valid since this is a receivables issue and not a payable issue. But thanks for trying to help. But just scanning the payables issue I am going to say it is safe to assume that their is no simple work around for the receivables issue either.
Thanks to every member of this community for always finding a workaround to our everyday accounting issues, and thanks to the Wave team for making wonderful software available to all of us free of charge.
I do not know if this is still relevant but it may help someone in the future.
We run a web development agency and there's a need for us to always make a prepayment deposit to our domain registrars so that anytime a client renews their domain name through our billing platform, the information will be automatically processed and renewed via API with the registrar.
So we've tried different ways to update these records manually in Wave because all our accounting, including maintenance services, operating expenses and other transactions are done through Wave.
We have tried different methods and read many articles, but what eventually worked for us was simply creating a new account each for our domain registrars under Charts of Account > Vendor Prepayments and Vendor Credits
Then we can make expenses payments using Journal Transaction entries from any account under Cash and Bank, depending on the currency of the transaction. You can also create a Bill for this and make excess payment.
Then whenever a domain is renewed, we then take the details, create a new bill for that transaction, and pay it using Payment Methot > Others and Select the specified Vendor name under Payment Account.
**
Once we did this, the records and the balance was automatically updated in our **Balance Sheet.