The invoicing function in QuickBooks I frequently find misused, ignored, or the process is just never followed through to the end. Misusing the invoicing function and the items lists
associated with it can lead to a disaster in your chart of accounts. Ignoring the invoice function can lead to a complete misunderstanding of what you're actually due from your customers. And not following the process can lead to a massively inflated accounts receivable when you may have already recognized the checks from your customers as income. However following the basic invoicing flow as will follow can simplify your day to day and year end. For the example we'll say we're a web designer named Tim who just bought QuickBooks and needs to invoice his customer for his first job which was priced out to be $1,000.
- Before you can even send an invoice to a customer you must create services to populate your list. This can become more complicated as you begin to dive into QuickBooks as a contractor but lets just begin with the basics. To create a web designing service go to the top and select the "Lists" pull down menu and click "Item List". From here right click and select "New". A new window is brought up that you need to begin to fill in. Tim will specify the type as "Service" and call the Item Name/Number Web Design. Tim can then input his rate in per hour or simply just fill the amount in on the invoice he had quoted the customer. Under account specify the appropriate Income account and your good to go.
- Now that the item Web Design has been created we can create an invoice. Select the Customers icon up top to bring up the QuickBooks Customer Center and then right click "New Customer". From here you can specify the customer name and all their subsequent information you feel as necessary. When the customer has been created right click the customer name you've created and click "Create Invoice". From here you can specify the invoice date in the top right corner. The invoice # though will be automatically populated. In the fields below you can now specify the item as "Web Design". In the amount column Tim would input $1,000 for his web design work. The basic invoice is now good go to go, click Save & Close.
- Businesses send invoices in usually two ways by either giving the customer a hard copy or sending a digital version, QuickBooks easily
supports both. Go back to the customer (which now has a balance total of $1,000) and double click the newly created invoice. From here you can edit the invoice or as we're about to do, send it off to the customer. If you're mailing a hard copy go to the left and click the printer icon, this will print the invoice. If you're going to email this to a customer click the Send icon next to the Print icon. From here specify the given information and send it off to the customer.
- If all goes as planned the customer will pay the $1,000 by either sending a check, paying in cash, using a credit card etc. Thankfully though QuickBooks is setup to receive all of these payments and they're all practically done the same way. Find the customer that you've been paid for, right click, and click receive payment. Here you can type in all of the pertaining information of the payment details as to whether it's a check, credit card, wire transfer, and so forth. After which the payment is then received in undeposited funds to be deposited into your bank.
- When this is all completed sending a receipt in QuickBooks is the last step to let the customer know that the services have been paid for. Double click the paid invoice and just like before when sending an invoice you'll either click the print icon to send a hard copy or the send icon to deliver a digital copy to their email address showing the invoice as paid.
These are the basics as to how to add services to populate your invoice, create the invoice in QuickBooks, and then receive the payment from your customer and send the subsequent receipt. By following the basic steps it will help keep your chart of accounts in check, reflect a proper accounts receivable balance, keep your customers happy by providing them with paper trail as to what they paid, and giving you the business owner a financial forecast of what to expect for your cash flow needs in the near future.