If a customer overpays how do you categorise the overpayment on the bank transactions to ensure the credit reflects on the customers account and the bank reconciles?

Good day. Thanks for sharing your concern on the QuickBooks Community page.

I'll help you categorise your downloaded overpayment transaction in QuickBooks Online. Here's how:

1. Go to the Transactions menu and select Bank transactions.
2. Click the downloaded overpayment transaction.
3. Select the Match button, then check the invoice transaction. If you haven't created the invoice yet, I'd suggest recording it first.
4. Click the Resolve button.
5. In the Payee column, choose your customer.
6. Under Category, select Accounts Receivable.
7. Write overpayment in the Memo column and select Out of Scope (0% Sales) as your Tax since the system can't track tax amounts on A/R and A/P accounts.
8. Click Match.

This should now create a credit balance to your customer's account. You can apply this credit to any open invoices or future ones.

After that, reconcile your accounts to ensure they match your bank and credit card statements. 

Moreover, you can review our Reconciliation Guide if you need help doing or fixing a reconciliation in QuickBooks.

If you have further questions about categorising customer's overpayment in QuickBooks, just add them to the thread. We'll be here to help. Have a good one.