If you created an invoice in QuickBooks Online to record a sale to a customer, you are expecting to receive payment from your customer for that invoice. Receiving payments is only necessary if you have an open invoice to apply the payment to.
Receiving payments in QuickBooks Online helps maintain an accurate accounts receivable balance. When a payment is entered into QuickBooks, the accounts and financial statements are affected as follows:
Account Affected Impact on Account Financial Statements
Accounts Receivable Decrease Balance Sheet
Cash Increase Balance Sheet
If you receive a payment from a customer and you have not created an invoice in QuickBooks then you must go back and create the sales receipt. You can use the sales receipt feature in QuickBooks Online to enter this payment.
You may be wondering why there is no impact on Income when a payment is received into QuickBooks. Please keep in mind that one of the accounts affected when you create an invoice is Income. Since Income was recorded at the time the invoice was created, there is no change to Income when payment is received.
QuickBooks allows you to make sure that payments are applied to the correct invoices. This will ensure that your accounts receivable balance is accurate. One of the most common mistakes made when checks are received from customers is that they are entered into QuickBooks as a deposit. This mistake will create the following issues:
The outstanding invoice will remain unpaid in QuickBooks
The amount owed by the customer (accounts receivable) will be overstated
Sales (Income) will be overstated because it was recorded when the invoice was created and then again when the deposit was entered.
The account used to record the deposit transaction may not be correct
If you follow these steps, you can minimize these type of issues:
When a check is received from a customer, check to see if the customer has any open invoices. If so, then follow the steps outlined below for receiving payment.
If the customer does not have any open invoices, then follow the steps in the sales receipt article to record this payment.
Steps to Receive a Payment in QuickBooks Online
Step 1 – Go to Receive Payments
From the Home page, below the Customers column, select Receive Payment as indicated below.
Step 2 – Enter Customer Payment
The following window should display on your screen. The fields that should be completed are as follows:
Customer Name – Select the customer’s name from the drop down.
TIP: If you have not set up the customer info yet, then this customer does not have any outstanding invoices in QuickBooks. Do not proceed with receiving this payment. Close out of this window immediately, and follow the steps in the sales receipt article to learn how to record this payment.
Payment Date – This should be the date that you received the payment.
TIP #1: This date does not impact financial statements, so if you don’t know the exact date that you received the payment, it is ok to make your best guess here.
TIP #2: Keep the envelope that the checks come in so that you can use the postmark date as your payment date.
Payment method – Select the payment method from the drop down list. The options are check, cash or credit card. If you have an Intuit payments account, go ahead and select credit card for the payment method, and enter your customer’s credit card information. Once you click the save button, QuickBooks will process the credit card payment. A message will display on the screen to inform you whether the credit card payment was accepted or declined.
Reference no. – Enter the check # here if the payment method was a check. If not, you can enter any info here that will help you reference the payment later on.
Deposit to – Select the bank account that you will deposit this payment to from the drop down.
Amount received – This will auto-populate once you select the invoice that this payment applies to in the Outstanding Transactions list.
Check mark – Put a check mark in this column next to the invoices that the payment is for.
Step 3 – Save Customer Payment
Click the arrow to the right of the Save and new button
Select Save and close as indicated below.
save customer payment
Step 4 – Confirm Payment was Correctly Applied
From the left navigation bar, select Customers as indicated below.
QuickBooks Online Main Menu
Click on the customer’s name, as indicated below.
Customer List QuickBooks Online
Locate the invoice # and amount. Once you find it, the Status column should indicate PAID as indicated below.
Invoice Status QuickBooks Online
QuickBooks will also mark the invoice as PAID. To display the paid invoice, just click on the Paid status and it will pull up as indicated below.
Display Paid Invoice QuickBooks Online
Posted in: QuickBooks Tips and Advice