One of the most important processes in managing your business is tracking and receiving payments from your customers. QuickBooks Online guides you through a few easy steps to ensure that your receivables are correctly recorded, and your bank reconciliations will be a breeze!
For a cash basis business that receive cash at the time of sale:
- Select the “Sales Receipt” under the “+ New” button in QBO
- When recording the sales receipt, the “Deposit to” account should be undeposited funds. This is a clearing account created by QBO to ‘hold’ the money until you are ready to make a deposit.
- Once you are ready to take your payments to the bank, utilize the “Bank Deposit” transaction under the “+ New” button
- On the Bank Deposit screen, check off all of the payments that you are now taking the bank. Your total should tie to your bank deposit, so when reconciling your bank account, you can easily match these deposits to your bank statement.
For an accrual basis business, there is an additional step to ensure your Account Receivable stays up to date:
- First, select “Invoice” under the “+ New” button. An invoice will record your transaction to your sales and accounts receivable accounts
- Next, when the funds are collected from your customer, select a “Receive Payment” transaction under the “+ New” button to clear that accounts receivable and mark the invoice as paid
- Ensure that “Undeposited Funds” is the selected account under the “Deposit to” prompt on the Receive Payment screen
- Finally, record a “Bank Deposit” under the “+ New” button. This allows you to select the received payments that you are taking to the bank – completing the process and getting you ready for your bank reconciliation!
ProAdvisor Tip: Even if you are a cash basis taxpayer, you can still enter invoices and utilize the above accrual workflow to keep track of outstanding customer balances.
Utilizing the Accounts Receivable flow in QBO will help you track your customer payments and tie your deposits to your bank statements at the end of the month. If you have any questions on this or anything else QuickBooks related, please give us a call at 419-289-7007 and our team of QuickBooks ProAdvisors would be happy to assist you.