Wise-Pay Overpayments in QuickBooks Online
A batch payment 'Overpayment' will go through the following three steps when created:
Step 1: Create Invoice for Payment (Liability Debit to take up the liability and allow for payment via Wise-Pay Clearing Account.)
Step 2: Create Credit Note (Liability Credit from prepayment account to Credit Note)
Step 3: Apply Credit Note (to future invoices)
Step 4: User initiated Payment Sync will then apply payment to ConnectWise Invoice. (Applied Liability from credit note to invoice - Revenue)
Note: A Credit Note created by Wise-Pay for the purpose of Overpayments created by Wise-Pay will sync back to ConnectWise as part of the Payment Sync. You will not need to create any further transactions in ConnectWise. Wise-Pay created Overpayments will also sync as payments to ConnectWise as is the case for Pre-Payments created directly in the accounting system.
What transactions are created from an Overpayment:
Step 1: Invoice transaction
Purpose: The function of the invoice transaction is to take up the liability, and allow a payment to be applied to the invoice in the same way as a normal payment would.
An Invoice is created for the company making payment, with Wise-Pay then allocating the amount of money collected to the user defined Wise-Pay Prepayments account. The payment of this invoice is applying against the Wise-Pay Payment account. This then allows funds to be reconciled in the same way as any other deposit being allocated to the payment account (such as the process for Wise-Pay Clearing)
Step 2. Credit Note Transaction
Purpose: The purpose of the Credit Note transaction is to bring in an accounting transaction that will allow the allocation of the "Overpayment" created and and applied to the Wise-Pay Prepayment account as part of Step 1. This transaction will appear on the Company Account as a credit, and can be applied to any future invoices.
The Credit Note transaction will take the money out of the liability account (Wise-Pay Prepayments) and then apply it against an invoice as an application of credit.
Step 3: Apply Credit Notes
Purpose: When you apply a credit note as created in Step 1, the payment is applied to the invoice at the time when the credit is applied. As Xero is correctly allocating the payment via a liability account, revenue is then recorded as per the date of the invoice (accrual) or date when the payment is applied (cash).
The following example shows a number of credit notes that are available to be applied against Invoice 572, as a result of a Wise-Pay Overpayment being created in the earlier steps.
Step 4: Sync Overpayment applied as Payments to ConnectWise
Purpose: When a overpayment is applied to an invoice through the credit allocation processes in Step 3, a payment sync is required to update the payment application detail in ConnectWise. Wise-Sync will identify payments which have been created as part of the Wise-Pay Overpayment process and allow these to be applied as Cash Payments in ConnectWise. Only credit notes that are created through the Wise-Pay Overpayment processes will sync via this method. Credits Created as part of a normal Credit Memo in ConnectWise or a Credit Note in Xero will not sync as these need to be applied as per existing processes.