# How to Handle Short Payments and Deductions in QuickBooks Desktop

> Record a customer payment that's less than the invoice, accept or dispute a deduction, apply a credit memo for a return, and write off what you won't collect in QuickBooks Desktop.

- URL: https://logistify.ai/guides/quickbooks-desktop/short-payments-deductions/
- Section: QuickBooks Desktop Guides, Receivables
- Applies to: QuickBooks Desktop Enterprise, Premier, Pro, Accountant
- Steps checked against: Intuit's QuickBooks Desktop help articles, checked October 2026
- Updated: 2026-10-20

**Short answer:** In Customers > Receive Payments, enter what the customer actually paid and check the invoice. If you'll collect the rest, select Leave as Underpayment. If you accept a deduction, such as a freight or pricing difference, record it in Discounts and Credits on the Discount tab against an account your accountant chooses. For a return or damaged goods, create a credit memo and apply it. Write off what you'll never collect with a $0.00 payment and a bad debt account.

## Before you start

- Find out why the customer paid short. The remittance, an email or the customer's AP portal usually says: a freight charge, damaged or missing goods, a pricing difference, a promotion, or an early-payment discount.
- Agree with your accountant which accounts deductions go to. Separate accounts for freight, damages and pricing make it possible to report on why customers pay short.
- Check Edit > Preferences > Payments > Company Preferences. With Automatically apply payments on, QuickBooks applies each payment to the oldest open invoice.

## Decide what kind of short payment it is

| Situation | What to do in QuickBooks Desktop |
| --- | --- |
| You'll collect the rest later | Record the payment and select Leave as Underpayment; the invoice stays open for the balance |
| Early-payment discount under your terms | Select Discount Info in Receive Payments; QuickBooks suggests the discount from the payment terms |
| A deduction you accept, such as freight or a small pricing difference | Discounts and Credits > Discount tab: enter the amount and the account |
| A return, or damaged or missing goods | Create a credit memo for the items and apply it to the invoice |
| A deduction you dispute | Leave as Underpayment, note the reason in the memo, and follow up with the customer |
| A balance you'll never collect | Write it off with a $0.00 payment and a bad debt account |
| The customer paid more than the invoices | Leave the credit to be used later, or give a refund from the Available Credit window |

*From Intuit's QuickBooks Desktop help articles, checked October 2026.*

## Step 1: Record the short payment and leave the rest open

1. Go to Customers > Receive Payments and choose the customer in Received From.
2. Enter the amount the customer actually paid, the date, the payment method and the reference number.
3. Check the invoice or invoices the payment covers, following the remittance rather than the oldest-first default.
4. When QuickBooks shows the underpayment, select Leave as Underpayment.
5. Add the reason to the memo, then select Save & Close.

## Step 2: Record a deduction you accept

1. In Receive Payments, enter the amount paid and check the invoice.
2. Select Discounts and Credits and open the Discount tab.
3. Enter the deduction in Amount of Discount and choose the Discount Account your accountant set up.
4. Select Done, then Save & Close. The invoice is now paid in full.

## Step 3: Apply a credit memo for a return or damaged goods

1. Go to Customers > Create Credit Memos/Refunds and choose the customer.
2. Enter the items returned or damaged and their amounts, then select Save & Close.
3. In the Available Credit window, choose Apply to an invoice and pick the invoice, or keep it as an available credit.
4. To use a kept credit later, open Receive Payments, select Discounts and Credits, tick the credit on the Credits tab, and select Done.

Our guide to [creating and applying credit memos](https://logistify.ai/guides/quickbooks-desktop/create-apply-credit-memos/) goes into more detail.

## Step 4: Write off what you won't collect

1. Create an expense account for bad debt if you don't have one, with your accountant's agreement.
2. In Receive Payments, choose the customer, enter $0.00 as the amount, and check the invoice.
3. Select Discounts and Credits, enter the amount to write off, and choose the bad debt account.
4. Select Done, then Save & Close.

Our guide to [writing off bad debt](https://logistify.ai/guides/quickbooks-desktop/write-off-bad-debt/) has the full steps.

## When one check pays several invoices short

- Check every invoice the remittance lists, and change the amount in the payment column for the invoice that was paid short.
- If Automatically apply payments is on, clear the checkmarks QuickBooks added and follow the remittance instead.
- Record each deduction against its own invoice, so the open balance and the reason stay on the right invoice.

## Where QuickBooks Desktop leaves the work to you

- Someone has to match each bank line to the invoices it pays and work out how much was deducted from which invoice.
- Unless you record the reason, in the memo or by using a separate account for each deduction type, you can't report on why customers pay short.
- Disputed deductions need follow-up, and a balance left as an underpayment stays open until someone chases it.

## How Logistify helps

Logistify [matches the payments in your bank file](https://logistify.ai/agents/accounts-receivable/) to the open invoices they pay and records clear matches in QuickBooks Desktop as Receive Payments. Short payments and overpayments are never recorded on their own: Logistify suggests how to split the amount, and the payment waits for your team to approve it or choose the invoices. Credit memos aren't handled yet, so a payment that relies on one shows as an overpayment for your team to decide.

For the basics of recording payments and deposits, see [how to receive payments and apply them to invoices](https://logistify.ai/guides/quickbooks-desktop/receive-payments-apply-to-invoices/).

## Frequently Asked Questions

### How do I record a short payment in QuickBooks Desktop?

In Customers > Receive Payments, enter the amount the customer paid, check the invoice, and select Leave as Underpayment. The rest stays open on the invoice.

### How do I record a customer deduction in QuickBooks Desktop?

In Receive Payments, enter the amount paid, select Discounts and Credits, and on the Discount tab enter the deduction and the account it should go to.

### How do I write off a small unpaid balance?

Receive a $0.00 payment against the invoice, then in Discounts and Credits enter the balance and choose a bad debt or charge-off account your accountant approves.

### What happens when a customer pays more than the invoice?

Select Leave the credit to be used later, and apply it to a future invoice from Discounts and Credits, or give a refund from the Available Credit window.

## Sources

- [Intuit: Record an invoice payment in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/accounts-receivable/record-invoice-payment/L9bczboPR_US_en_US)
- [Intuit: Resolve common issues applying payments](https://quickbooks.intuit.com/learn-support/en-us/help-article/accounting-bookkeeping/resolve-common-issues-applying-payment-towards/L2UMXN8tt_US_en_US)
- [Intuit: Write off customer and vendor balances](https://quickbooks.intuit.com/learn-support/en-us/help-article/vendor-management/write-customer-vendor-balances/L738xKfuq_US_en_US)
- [Intuit: Give a customer a credit or refund in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/customer-refunds-credits/give-customer-credit-refund-quickbooks-desktop/L9vZiXsKB_US_en_US)
- [Intuit: Write off bad debt in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/manage-invoices/write-bad-debt-quickbooks-desktop/L3SnZ6fgf_US_en_US)