I have a client who we did some work for briefly, and they overpaid us (knowingly). The credit has been sat on their account for 2 years now, and I just wondered what the best approach is with this? It’s highly doubtful that they’ll ever spend it, so ideally I would like to clear it, but not sure how.
Any advice would be great.
According to our accountant:
It needs to be reported as income somewhere but there’s a few different ways you can handle this.
The simplest way is to create an invoice for that client and post it to misc. income. You can then log a payment to the invoice and use the credit on account to pay it down.
The above option would be visible in the client’s control panel (if they have one). If you want to avoid this then you’d need to refund the credit to petty cash (see about refunding credits in this recent post I answered) then enter a corresponding amount on the petty cash account and tag this to a sales invoice under a different client account (e.g. the client could be called generic sales), again tag it to misc. income.
Hope that helps, let me know if you have any doubts.
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