diff --git a/app/Http/Controllers/PaymentController.php b/app/Http/Controllers/PaymentController.php
index 3597c3f47734..a7fad7e7e6c7 100644
--- a/app/Http/Controllers/PaymentController.php
+++ b/app/Http/Controllers/PaymentController.php
@@ -6,6 +6,7 @@ use App\Http\Requests\CreatePaymentRequest;
 use App\Http\Requests\PaymentRequest;
 use App\Http\Requests\UpdatePaymentRequest;
 use App\Models\Client;
+use App\Models\Credit;
 use App\Models\Invoice;
 use App\Ninja\Datatables\PaymentDatatable;
 use App\Ninja\Mailers\ContactMailer;
@@ -180,17 +181,28 @@ class PaymentController extends BaseController
     {
         // check payment has been marked sent
         $request->invoice->markSentIfUnsent();
-
         $input = $request->input();
-        $input['invoice_id'] = Invoice::getPrivateId($input['invoice']);
-        $input['client_id'] = Client::getPrivateId($input['client']);
-        $payment = $this->paymentRepo->save($input);
+        $amount = Utils::parseFloat($input['amount']);
+        $credit = false;
+
+        // if the payment amount is more than the balance create a credit
+        if ($amount > $request->invoice->balance) {
+            $credit = Credit::createNew();
+            $credit->client_id = $request->invoice->client_id;
+            $credit->credit_date = date_create()->format('Y-m-d');
+            $credit->amount = $credit->balance = $amount - $request->invoice->balance;
+            $credit->private_notes = trans('texts.credit_created_by', ['transaction_reference' => $input['transaction_reference']]);
+            $credit->save();
+            $input['amount'] = $request->invoice->balance;
+        }
+
+        $payment = $this->paymentService->save($input);
 
         if (Input::get('email_receipt')) {
             $this->contactMailer->sendPaymentConfirmation($payment);
-            Session::flash('message', trans('texts.created_payment_emailed_client'));
+            Session::flash('message', trans($credit ? 'texts.created_payment_and_credit_emailed_client' : 'texts.created_payment_emailed_client'));
         } else {
-            Session::flash('message', trans('texts.created_payment'));
+            Session::flash('message', trans($credit ? 'texts.created_payment_and_credit' : 'texts.created_payment'));
         }
 
         return redirect()->to($payment->client->getRoute() . '#payments');
diff --git a/app/Http/Requests/CreatePaymentRequest.php b/app/Http/Requests/CreatePaymentRequest.php
index f2e1d468419a..9398cb13beb5 100644
--- a/app/Http/Requests/CreatePaymentRequest.php
+++ b/app/Http/Requests/CreatePaymentRequest.php
@@ -28,10 +28,15 @@ class CreatePaymentRequest extends PaymentRequest
             ->invoices()
             ->firstOrFail();
 
+        $this->merge([
+            'invoice_id' => $invoice->id,
+            'client_id' => $invoice->client->id,
+        ]);
+
         $rules = [
             'client' => 'required', // TODO: change to client_id once views are updated
             'invoice' => 'required', // TODO: change to invoice_id once views are updated
-            'amount' => "required|numeric|between:0.01,{$invoice->balance}",
+            'amount' => "required|numeric|min:0.01",
             'payment_date' => 'required',
         ];
 
diff --git a/app/Services/PaymentService.php b/app/Services/PaymentService.php
index 627381edc7cb..1f1f54e713e6 100644
--- a/app/Services/PaymentService.php
+++ b/app/Services/PaymentService.php
@@ -140,6 +140,12 @@ class PaymentService extends BaseService
         }
     }
 
+    public function save($input, $payment = null)
+    {
+        return $this->paymentRepo->save($input, $payment);
+    }
+
+
     public function getDatatable($clientPublicId, $search)
     {
         $datatable = new PaymentDatatable(true, $clientPublicId);
diff --git a/resources/lang/en/texts.php b/resources/lang/en/texts.php
index a81830cc26b1..9997cc2bc2fd 100644
--- a/resources/lang/en/texts.php
+++ b/resources/lang/en/texts.php
@@ -2389,6 +2389,9 @@ $LANG = array(
     'updated_payment_term' => 'Successfully updated payment term',
     'archived_payment_term' => 'Successfully archived payment term',
     'resend_invite' => 'Resend Invitation',
+    'credit_created_by' => 'Credit created by payment :transaction_reference',
+    'created_payment_and_credit' => 'Successfully created payment and credit',
+    'created_payment_and_credit_emailed_client' => 'Successfully created payment and credit, and emailed client',
 
 );