Short Payments and Overpayments: How to Handle Them Cleanly

Most payments match their invoice to the naira. The ones that don't cause most of the reconciliation work in a finance team: a transfer that's ₦1,500 light, a corporate payment that's 5% short on purpose, a customer who pays the same invoice twice. Each needs a different response, and treating them all as "close enough" is how balances quietly disappear.

First, find out why the amount is different

Before deciding what to do, sort the payment into one of four cases. The amount alone won't tell you, so look at who paid and how.

Getting this step right matters more than anything that follows. A withholding deduction chased as a debt annoys a good customer. A genuine shortfall written off as "probably WHT" loses money.

Case 1: a genuine short payment

Garki Training Institute is invoiced ₦241,500 for a block of staff training. The transfer arrives for ₦240,000.

The rule is simple: the invoice stays unpaid until it's paid. Record the ₦240,000 against it, show the ₦1,500 balance, and tell the customer straight away while the payment is fresh in their mind.

Thank you for your payment of ₦240,000 for INV-2026-0412. The invoice total is ₦241,500, so ₦1,500 is still outstanding. You can pay the balance using the link below.

Don't mark the invoice paid and "absorb" the difference. Do that across 300 invoices a month and the leakage is real money, and your debtors' report is wrong in a way nobody can trace later. If you decide a small balance isn't worth collecting, write it off deliberately, with an approver and a reason, so the decision is on the record.

Case 2: withholding tax deducted at source

Many company customers are required to deduct withholding tax (WHT) from what they pay suppliers and remit it to the tax authority. Under the Deduction of Tax at Source (Withholding) Regulations 2024, deduction is linked to when the payer recognises the liability, and certain transactions by small businesses with a TIN below a ₦2,000,000 threshold are exempt (EY; Mondaq). Commentators disagree on the exact start date: some cite 1 July 2024, while a later FIRS circular treats the rules as effective from 1 January 2025 (Mondaq).

Here's how it shows up in your bank account. Bakare Advisory invoices a company in Ikeja for consultancy:

That ₦50,000 isn't a shortfall. It's tax paid on your behalf, which you can generally use against your own income tax once you hold the customer's WHT credit note or receipt. So the invoice is settled by ₦1,025,000 cash plus ₦50,000 WHT, and your follow-up should ask for the credit note, not the money.

Two habits make this painless:

• Expect it. For corporate customers, note in advance which ones deduct WHT, and at what rate for your kind of service. Our WHT guide covers the rates by transaction type.
• Track the credit notes. Keep a list of WHT deducted but not yet evidenced. Unclaimed credit notes are tax you've paid and can't use.

Rates and thresholds come from the regulations' schedule and can change, so confirm them with your tax adviser before relying on them.

Case 3: a planned part-payment

If you've agreed instalments, a part-payment isn't a problem. It just needs to be recorded against the right invoice with the balance visible. Agree the plan in writing, put the instalment dates on the invoice, and send a statement after each payment so the customer sees what's left. The invoice is paid when the last instalment lands, not before.

Case 4: overpayments and duplicates

Tunde Bakare's company pays INV-2026-0388 for ₦430,000 on Monday, and the same amount again on Wednesday because the approval email was forwarded twice.

You have three options, and the customer should choose:

1. Refund the duplicate to the account it came from.
2. Apply it to another open invoice, if there is one.
3. Hold it as a credit on the customer's account against their next invoice.

Whichever you choose, record it explicitly. An unexplained ₦430,000 sitting in your bank and not on any invoice makes your cash and your receivables disagree, and that's the first thing an auditor asks about. Never quietly keep it.

A short decision checklist

• Is the payer a company that deducts WHT? Check the difference against their usual rate before chasing.
• Is the shortfall small and unexplained? Keep the invoice open and tell the customer the same day.
• Is it part of an agreed plan? Record it and send a statement.
• Is it more than the invoice? Ask the customer whether to refund, apply or hold it.
• Writing off a balance? Get an approver and record the reason.

How Flux helps

When a customer pays a Flux invoice online by card or bank transfer, Flux checks the amount and the currency. A short payment leaves the invoice unpaid and flagged for review with the exact shortfall: "Payment of ₦240,000 is short by ₦1,500, so the invoice stays unpaid." A payment in the wrong currency is rejected. Customer statements show every invoice, payment and balance, so the follow-up writes itself. See Online Payments.