What is Overpayment?

Definition

Overpayment occurs when an amount paid exceeds the actual amount due for an invoice, contract, or financial obligation. Overpayments can result from calculation errors, duplicate payments, or misapplied transactions, and may require adjustments or recovery.

Key Features

• Error Identification: Detects duplicate or excess payments to vendors, employees, or customers.

• Reconciliation: Supports timely reconciliation to ensure financial records accurately reflect outstanding balances.

• Recovery Management: Initiates processes for refund requests, credit notes, or offsetting future payments.

• Audit Compliance: Maintains proper documentation for internal and external audits to track overpayment adjustments.

• Financial Controls: Helps prevent future occurrences through improved approval workflows and payment verification mechanisms.

Summary

Overpayment is the excess of funds paid beyond what is owed. Proper identification, reconciliation, and recovery processes are critical to maintain accurate financial records and strong internal controls.