Create a credit memo to record a customer overpayment

Customers sometimes pays an amount over what the agreed amount should be.  One option that can be done is to refund the open balance.  Another option would be to create a credit memo for this, which can eventually be applied to future invoices billed against the customer.

Let us use this as an example:

Invoice for $1,000
Payment for $1,100
Overpayment of $100 to convert as a credit memo

Here is how convert $100 to a credit memo:

1. Go to Transactions > Sales > Create Invoices.
2. Enter a non-inventory or service item to use in the Items tab.
3. Set the amount for $100.
4. Click on the Add button.
5. Click on the Save button.

* The purpose is to create an invoice to apply temporarily against the overpayment made by the customer.

6. Pull up the payment with the $1,100 amount.
7. Click on the Edit button.  This will place the payment in Edit mode.
8. In the Apply tab, check the box beside the $100 invoice created.  This fully applies the payment to both the $1,000 and $100 invoices.
9. Click on the Save button.
10. Go back to the $100 invoice.
11. Click on the Credit button.
12. Make sure the amount and other information are correct.
13. Click on the Save button.