Overbilling, and overpayment

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Hi experts!

If an overbilling to a customer or an overpayment to a vendor occurs, and you wish to make adjustments on the next month's invoice or payment statement, what kind of (negative) entries should be made?

I would like to know how to deal with these cases on the Dynamics 365 Business Central.

Look forward to herring from you.

Nobhara

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Dynamics 365 Business Central

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Ramesh Kumar 7,547 Super User 2026 Season 1 on at

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Sales credit memo or Purchase credit memo

https://learn.microsoft.com/en-us/dynamics365/business-central/srb/sales/credit-memo-cancellation

Thanks

Ramesh

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YUN ZHU 99,082 Super User 2026 Season 1 on at

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While this will affect costs, the easiest way to do this is to simply discount it on the order/invoice.

Or you can refund first, and then post payment when the invoice is posted next month. Although there will be no bank record, there is no problem in the system.

Hope this can give you some hints.

Thanks.

ZHU

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Sohail Ahmed 11,169 Super User 2026 Season 1 on at

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In Business Central, for overbilling a customer, create a Sales Credit Memo to reflect the excess amount, then apply it to the next invoice. For vendor overpayments, post a Purchase Credit Memo or leave the extra amount as an open entry to be applied to the next payment. Both methods ensure proper reconciliation and audit trail.

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Jeffrey Bulanadi 9,112 Super User 2026 Season 1 on at

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Hi Nobhara,

Handling overbilling and overpayment in BC requires a clean audit trail and proper application of credit entries. Here’s how to approach both scenarios:

Overbilling to a Customer

If you've billed a customer more than intended and want to adjust it in the next invoice:

Create a Sales Credit Memo:

Go to Sales Credit Memos and create a new one referencing the original invoice.

Apply it to the overbilled amount.

Post the credit memo to reduce the customer's balance.

Apply to Next Invoice:

When posting the next invoice, use the Apply Entries function to apply the credit memo against it.

This ensures the customer sees the adjustment and the ledger reflects the correction.

Overpayment to a Vendor

If you've paid a vendor more than required and want to adjust it in the next payment:

Option 1: Purchase Credit Memo

Create a Purchase Credit Memo for the overpaid amount.

Apply it to the next invoice or leave it open for future application.

Option 2: Leave Open Entry

Leave the overpayment as an open vendor ledger entry.

When posting the next payment, apply the open credit to reduce the payable amount.

Optional: Refund Handling

If the vendor issues a refund, post it as a Refund in the Payment Journal with the correct document type.

Tips for Clean Reconciliation

Always use Apply Entries to link credit memos or refunds to the correct transactions.

Use Document Type fields properly (e.g., Refund, Credit Memo) to maintain clarity.

Run Vendor and Customer Statements to verify balances and open entries.

Helpful Resources
Issuing a Customer Refund in BC
Collect Outstanding Balances – Microsoft Learn

If you find this helpful, feel free to mark this as the suggested or verified answer.

Cheers
Jeffrey

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