It’s one of your more pleasant tasks as a QuickBooks user: receiving payments from customers. Here’s how it works …
QuickBooks was designed to make your daily accounting tasks easier, faster, and more accurate with built-in processes. If you’ve been using QuickBooks for a while, you’ve probably found that to be true, providing you are following the proper processes. Some chores, of course, aren’t so enjoyable; like paying bills, reconciling your bank account, or anything else that has the potential to reduce the balance in your checking accounts.
The process of receiving customer payments is one of your more enjoyable responsibilities. You have supplied a product or service that someone liked and purchased, and you’re now getting the money due you.
Depending on the situation, you’ll use one of multiple methods to record customer payments. If you use an industry specific management, you should always begin with receiving payments in it first, and allow the integration into QuickBooks bring the payments in as the below manual process is explained below.
Here’s a look at some of your options.
The Money Screen
If you’re like many businesses, you have invoices for customers showing what they owe and even when their payment is due. So one of the primary ways to record payments is by using the Receive Payments window. This is where management systems typically transfer payments you receive.
To manually receive payments for Jobs, click the Receive Payments icon on the home page, or Menu Bar if you have customized it as I have taught in classes, or click Customers | Receive Payments.
You’ll use QuickBooks’ Receive Payments screen when you record a payment made in response to an invoice only.
Do NOT use this to receive other payments such as rebates, or other non-earned revenue. These are handled directly on the Deposit Form.
The first thing you’ll do, of course, is choose the correct customer and Job by clicking the down arrow in the field to the right of RECEIVED FROM. The outstanding balance from that customer will appear in the upper right corner, and invoice information will be displayed in the table below.
Enter the PAYMENT AMOUNT and make sure the DATE is correct. (The next field, REFERENCE #, changes to CHECK # only if the CHECK option is selected.)
Next, you’ll need to ensure that the payment is applied to the right invoices. If it covers the whole amount due, there will be a checkmark in every row in the first column of the table automatically if your Preferences are set properly.
If not, QuickBooks will use the money received to pay off the oldest invoices first. To change this, click Un-Apply Payment in the icon bar and click in front of the correct rows to create checkmarks.
Special Note: If you are using a management system, this “applying” to an invoice does not automatically occur even if the Preference is set properly. From my research either the code for all the management systems is lacking, or Intuit does nor provide a way to handle this properly.
For this reason, you should run an Open Invoice Report at least weekly and go through all Jobs that do not show the Payments applied (They will show as an Invoice and a listing of Payments… you should only see an Invoice and a balance, if there is any, if they are properly applied).
Several Payment Options
You’ll then want to tell QuickBooks what payment method the customer is using. Again, if you are using a management system, you must make sure the Payment Types exist in both the management system and QuickBooks.
Four options are initially displayed in QuickBooks. The possibilities that are visible here are:
- CREDIT DEBIT – A specific card type may be shown here if you’ve indicated the customer’s preferred payment method in his or her record.
If the desired payment method isn’t included in those four, click the down arrow under MORE. This list includes all the other payment types you have setup in QuickBooks.
If it’s still not there, you also click Add New Payment Method. If it is there, you just need to select it and Click OK.
The Payment Method window
When you choose your payment method from the list that is listed as a credit card, a window opens containing fields for the card number and expiration date regardless whether you have Intuit Merchant Services or not.
If you don’t just click Done. If you do, after you’ve entered the credit card information (or if you have stored it), you’ll be returned to the Receive Payments screen. If you’re satisfied with your work there, click Save & Close or Save & New. At this point, if you do have Intuit Merchant Services, the credit card should process and you will be asked for additional information, and then a confirmation or decline message will follow.
Haven’t gotten set up to accept credit and debit cards yet, or are you looking for a better option? I know you receive calls almost daily about saving money on your credit card processing. They all say they save you money, but you may still spend thousands of dollars every year, and trying to figure out what you are really paying is almost impossible.
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Depending on the type of business you have and its physical location, there may be times when customers will come in and buy something on the spot. You’ll always have the option to use a Sales Receipt instead of invoice.
In general, you use Invoices if they are going to be paid later than when you create them. Sales Receipts have the payment built in. However, you can still always use Invoices as well and if your QuickBooks version is new enough, just click Receive Payments from the Invoice Menu as well.
To Create Sales Receipts click on the Home Page or open the Customers menu and select Enter Sales Receipts to open this window:
The Enter Sales Receipts window
You’ll complete this form much like you entered data in the fields of the Receive Payments window. As you can see, you can print to mail to the customer and/or email it as well.
After all the hard work you’ve done to make your sales, the last thing you want to do is record a payment incorrectly so it isn’t processed and you don’t get paid. Though QuickBooks makes the mechanics of receiving payments simple enough, you still should understand the entire process involved in getting income into the correct accounts.
Maybe we will look at Deposit process next month. We see often this is not understood well and the usage of the Undeposited Funds process not processed correctly.
Regardless whether you are profit or non-profit organization … a service business, contractor, or church … you should always strive for best-in-class financial practices, and certainly take the time that is needed to “steer your ship” in the right direction by using accurate and timely information from QuickBooks.
We see many reasons businesses don’t get good timely financial information from QuickBooks:
- The proper setup of QuickBooks was never done properly.
- You and your staff haven’t been properly trained on how to use QuickBooks.
- You haven’t made the commitment to get the timely and accurate information you need so to make good business decisions.
There are several resources you should consider … the first being our company AEII, QuickBooks R Us. We are here to assist any small business in achieving their goals and provide the training and support needed to achieve their goals.
Thank You and I look forward in sharing QuickBooks Tips and Tricks with you next month …
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