In our last post we examined sales forms in QuickBooks. A logical next step to looking at QuickBooks features is collecting money. When customers pay, what’s the process in QuickBooks?
We’ll look at alternative methods to adding to your bank balance later in this article, first let’s review the process QuickBooks normally expects you to follow.
If you invoice a customer, they will pay (hopefully) at some point in the future. When they do, choose Receive Payments from the QuickBooks home page or the Customer menu. The following screenshot is the window you will get.
Filling out the top portion of the form is pretty straightforward. In the center of the window, QuickBooks lists all the open invoices for this customer. In the case above, there’s only one.
Sometimes, there may be several open invoices. If the payment is not for all of them, be sure QuickBooks selects the correct invoice to pay. Note also that an invoice may be partially paid and QuickBooks will show that next time you receive a payment. In the example above, the original invoice was $5732.23 but has been partially paid. Only $4732.23 remains as an open balance.
By default, QuickBooks posts payments to an account called Undeposited Funds. This allows QuickBooks to accumulate the payments you record on one list. Then, when creating the deposit, you select multiple payments to create a bank deposit in QuickBooks that will match the amount of the same deposit that appears on your bank statement. It makes reconciliation much easier.
Sometimes, a QuickBooks user only receives a few payments a month and they all go directly to the bank. There’s really no need for Undeposited Funds. It only adds another step.
You can tell QuickBooks not to use the Undeposited Funds account by unchecking the checkbox in Preferences.
With the preference changed, we can decide to deposit this payment to a bank account rather than Undeposited Funds. This means we won’t have to use a Record Deposit transaction in QuickBooks to get this into our bank balance. Once we save the payment, it’s already there.