How to Record Payments from Customers in QuickBooks Desktop
Recording customer payments is a crucial part of accounting and bookkeeping, especially when using QuickBooks Desktop. QuickBooks Desktop provides a user-friendly platform to efficiently log and track customer payments, generating insights into cash flow and accounts receivable. Whether you’re just starting out or looking to optimize your payment recording process, this comprehensive guide has you covered.
Before recording any customer payments, there are a few prerequisites to ensure the process goes smoothly:
- Have QuickBooks Desktop installed and set up. This includes creating a company file, setting up accounts, items, customers, etc.
- Review outstanding customer invoices and have them ready for payment recording. Invoices should be emailed or provided to customers ahead of payment deadlines.
- Match payments received to outstanding invoices. QuickBooks Payments should reference an invoice number or customer name.
- Prepare source documents. Have receipts, remittance advices, bank deposits, credit card statements etc. handy before recording payments.
Step 1: Receive Payment from Customer
The first step is to actually receive payment from the customer through various payment methods:
- Customer check – If the customer sends a physical check, ensure it is signed and dated accurately. Note the check number to match against invoices.
- Cash payment – Count the physical cash received and tally it against invoices. Have the customer sign a ‘cash receipt form’ for documentation.
- Credit card payment – If the customer pays via credit card online or over the phone, retrieve documentation like approved receipt emails from the merchant processor.
- EFT/ACH transfers – Log into the bank account to verify funds received through direct bank transfer. Have routing and account numbers handy.
Step 2: Match Received Payment to an Outstanding Invoice
Once payment is received, it should be matched to the corresponding open customer invoice:
- Log into QuickBooks and open the Customer Center. Select the customer who made the payment.
- Open the customer’s transactions to view their open invoices. Click on the invoice that matches the payment amount and method.
- Confirm the invoice due date, number, items etc. match the receipt or documentation from the customer.
- If full payment is received, proceed to record the payment. If partial payment, adjust the payment amount to the amount received.
Pro tip: If unable to match a payment to an invoice, create a ‘payment on account’ in QuickBooks to log the unallocated payment, then apply it later.
Step 3: Record Payment in QuickBooks Desktop
The key step is to actually record the customer payment in QuickBooks to update balances and books:
- Go to Receive Payments section under Customers menu. Select the payment method used – check, cash, credit card etc.
- Enter the amount received as per the invoice or documentation. Input other details like payment date, customer name etc.
- Click on payments tab and select the open invoice(s) to apply the payment towards. QuickBooks auto-populates open invoices from the selected customer.
- Click Save and Close to record the payment. The invoice balance reduces by the payment amount.
Pro tip: To record advance payments, directly go to Receive Payments instead of creating an invoice first.
Step 4: Print Payment Receipt for Customer
It’s good practice to provide payment receipts to customers for their records and reference:
- Go to Customer Center and locate the recorded payment. Click Print to access payment receipt templates.
- Pick a formatted receipt template that displays payment details, original invoice etc.
- Customize receipt with company branding like logo, address, contact details etc.
- Save receipt as PDF and email or physically mail it out to the customer for their records.
Pro tip: Automate payment receipts by customizing receipt templates beforehand using the ‘Memorize’ feature.
Step 5: Perform Post-Payment Documentation
Follow through with these documentation steps after payment recording:
- File source documents like physical checks or cash receipts for audit trails.
- Update accounts receivable aging reports and monitor customer balances.
- Reconcile payment entries with bank deposits and credit card statements regularly.
- Communicate payment details like outstanding balances to customers for further payments.
- Update payment information in sales and CRM systems if integrated with QuickBooks.
Pro tip: Run monthly Customer Payment Reports in QuickBooks to track customer payment history and activity easily.
Recording customer payments properly in QuickBooks Desktop streamlines the accounts receivable process. Key steps include matching payments to invoices, recording them correctly, providing receipts and maintaining documentation. With this optimized workflow, you can track payments end-to-end and reconcile all customer balances accurately.
Implementing these best practices eliminates confusion around customer payments and improves financial visibility for small businesses and bookkeepers. QuickBooks Desktop’s user-friendly interface further simplifies payment management for businesses. Leverage the tips provided to enhance your payment recording process today.