I wanted to explain the proper way to receive payments and record them in the bank account in QuickBooks since many users seem to struggle with this process. I have come up with a simple way to explain this process to our clients so that they understand it.
I will break the process down into the three icons that QuickBooks uses: Invoicing, Receive Payments and Record Deposits.
Invoicing and Statement Charges
The first step in the process is creating an invoice or statement charge. This is a pretty simple step to understand for most people. The invoice or statement then needs to be sent to your customer so that they can pay it.
Receive Payments
A customer has sent you a payment in one form or another and now you need to record this payment in QuickBooks. Click on receive payments on the home screen, select the customer, fill in all appropriate information and select the open invoice or invoices you would like to apply the payment to.
Many QuickBooks users think this is the end of the process. However, you need to think of receiving payments as you working at your office and recording the payment for accounting purposes only. You still need to physically deposit the money into the bank.
Record Deposits
The record deposits function needs to be thought of as you physically taking payments to the bank and making a deposit. You click on the record deposits button in QuickBooks and select all payments (from step 2) that you intend to bring to the bank to be deposited.
You then need to tell QuickBooks which account you will be depositing into and on what date. This is a crucial procedure as you need to make sure you are accurate during this process to make your checking account reconciliation easier.
In Summary:
Invoicing = billing your customer
Receive Payments = applying customers' payments to open invoices in QuickBooks
Record deposits = you physically go to the bank and make a bank deposit
