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QuickBooks Tips Blog

QuickBooks Tip: Cleaning up Customer Balances

Posted by Austin Walker on May 5, 2016 8:30:00 AM

Customers are the lifeblood of every business. Making sure that the Customer Center in QuickBooks appears as it should is essential in managing a business. A regular run through of yourCustomer list will make it easier to identify things that need to be corrected and it will definitely help you avoid confusion in the future.

By opening the list of Customers, one can easily identify a customer with a zero balance, an unpaid invoice, or an available credit. It is the best starting point to validate whether customer balances are correct. Some other accounts receivable reports can also be helpful.Depending on the amount, if it is a collectible or an amount to be refunded, below are some tips to make sure that zero customer balances will appear as zero.

Credits and Refunds

There are instances when customers return items that are either paid or unpaid, or sometimes, as a result of unforeseen events such as failure to deliver the merchandise or that the product is not what the customer expected. This is when you need to decide if a Credit Memo or a Refund will be used. A Credit Memo can be used to offset an outstanding balance. It is most applicable if a customer returns or cancels an item even before paying for it, or for when they don’t want to get their money back now but want use it as a payment for future purchases.

On the other hand, the Refund option can be used to reimburse customersfor overpayment or other paid services or items. In this regard, if there is an available credit or a negative amount showing in the Open Balance column for a customer, it can be dealt with by processing a refund.

First thing to bear in mind is that in QuickBooks Online, a refund can either affect the accounts receivable or just the bank balance. Second, there are two ways of processing a refund according to purpose: to offset an available credit or just to reimburse the customer for returned products. The Refund Receiptcan be used without affecting the customer’s balance (that is, when it is already zero).To do this:

  1. Open the Refund Receipt screen (Plus sign → Refund Receipt).
  2. Fill out necessary fields and save the transaction.

However, when accounts receivable is affected, as is the case with an overpayment; an advance payment with no invoice or sales receipt; or simply just to offset an available credit, a Check or an Expensemust be created.

  1. Open the Check screen.
  2. Fill out the fields, make sure to select Accounts Receivable for the Account.
  3. Save the transaction.
  4. Link the check to the open credit or unapplied payment.
  5. Open the Receive Payment screen
  6. Fill out the Customer and Date fields or the Memo field if necessary, but leave the other fields (Amount, Payment Method, and Reference Number) blank, including the Deposit too.
  7. Put a check mark on both the Check and the Unapplied Payment.
  8. Save the transaction.

Entering a Credit Memo affects the customer’s balance, but it still needs to be applied manually against an invoice. Once you have created a Credit Memo, link it to the invoice by recording a payment as above.

Fixing Incorrectly Applied Payments

Mistakes can happen! The more open invoices there are, the bigger the chance of applying a payment to the wrong invoice either for the same customer or to a different one. In some instances, the payment amount was accidentally modified, whichcan cause a discrepancy on the open balance. Other times, a payment is not linked to any invoice. To correct these, either edit or delete and re-create the transaction.

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Topics: QuickBooks, Customer Billing, Invoice

Why Small Businesses Need Great QuickBooks Estimates

Posted by Marti Major on Jul 9, 2014 7:00:00 AM

How do you put together your QuickBooks estimates? Are you putting down your costs on a napkin or the back of an envelope? Maybe you have stuff in a word document, and you just go in and replace the old customer name with the new one. Then you change the date, adjust your numbers up or down a little depending on how the last job went, and print.

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Topics: QuickBooks Tips, QuickBooks Tips Blog, QuickBooks Estimates, QuickBooks Estimate, Customer Billing