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Record invoice payments in QuickBooks

by Intuit48 Updated about 4 hours ago

Learn how to receive and record invoice payments, including full and part payments, editing or deleting payments, handling overpayments as tips, and managing credits.

🛈 This article is for customers using QuickBooks Online (Advanced, Essentials, Plus, and Simple Start) and Sole Trader.

Understanding sales transactions

QuickBooks offers two ways to record sales transactions:

Sales Receipt: Use this when a customer pays at the time of purchase. A sales receipt immediately finalises the transaction and records it in your books. (Note: Sales receipts are not available in QuickBooks Sole Trader.)

Invoice: Use this when a customer will pay later. You create and send an invoice, and then record the payment when it's received.

This article focuses on recording payments after sending an invoice – an important step for linking the payment to the original invoice. Follow the steps below based on the product you are using.

With QuickBooks Payments, you can see when customers view and pay invoices, and get an up-to-date picture of your cash flow to make smarter financial decisions. Learn more about QuickBooks Payments.

Record invoice payments

After you process a payment from a customer, you need to record it in QuickBooks so the invoice is marked as paid. You can record full or partial payments.

  1. Select + New.
  2. Select Receive payment.
  3. From the Customer dropdown, select the name of the customer.
  4. From the Payment method dropdown, select the payment method.
  5. From the Deposit to dropdown, select the account you put the payment into.
    Tip! You can put the money directly into an account, like your current account, or select Undeposited Funds if you need to group the payment with others.
  6. In the Outstanding Transactions section, select the checkbox for the invoice you're recording the payment on.
  7. Enter the Reference no. and Memo if needed.
  8. When you're done, select Save and close.

Note: To send a payment receipt to your customer, select ▼ Save and send. You can't customise your payment receipt.

Record payments even if you were only paid part of what's owed. QuickBooks keeps track of the remaining invoice balance:

  1. Select + New.
  2. Select Receive payment.
  3. From the Customer dropdown, select the name of the customer.
  4. From the Payment method dropdown, select the payment method.
  5. From the Deposit to dropdown, select the account you put the payment into.
  6. In the Amount received field, enter the amount your customer paid.
  7. In the Outstanding Transactions section, select the checkbox for the invoice.
  8. Enter the Reference no. and Memo if needed.
  9. Select Save and close.

If your customer pays you more or less than expected, you can make changes to a payment receipt easily. 

To edit a payment:

  1. Go to Sales and select All sales (Take me there).
  2. Locate and open the payment transaction.
  3. Edit the Amount received field.
  4. Select Save and close.

To delete a payment:

  1. Go to Sales and select All sales (Take me there).
  2. Open the payment you want to delete.
  3. Select More, then Delete.

Note: If you are editing or deleting a transaction linked to others, QuickBooks will alert you. Once you have deleted a transaction, it cannot be reversed.

  1. Go to Sales and select All sales (Take me there).
  2. Open the payment you want to delete. Note: If you're unsure which payment is linked to the invoice, open the invoice and select the payment from the top right corner.
  3. Select More.
  4. Select Void or Delete.

If you turn on the credit note auto-apply feature, QuickBooks handles this for you. If you turned off the feature, you can manually apply a credit note to an invoice.

To apply a credit note to an invoice:

  1. Select + New.
  2. Select Receive payment.
  3. In the Customer dropdown, select the customer.
  4. In the Outstanding Transactions section, select the open invoice.
  5. In the Credits section, select the credit notes you want to apply.
  6. For the open invoice in the Payment column, enter how much of the credit you want to apply.
  7. Leave the Payment method, Reference no., Deposit to, and Amount received fields blank.
  8. Fill out the rest of the form, including the Payment date.
  9. Make sure the total is correct after applying the credit note.
  10. When you're done, select Save and close.

To edit the credit note:

  1. Open the payment you have saved.
  2. Clear the checkbox of the credit notes you don't want to apply, or edit the amounts.
  3. If the payment is incorrect and you wish to start over, select More and then Delete. This will remove the entire payment.

To see the remaining balance for the customer:

  1. Go to Reports (Take me there).
  2. Find and open the Customer Balance Summary report.
  3. Select Run report.
  4. Review the customer's open balance in the Total column.

Note: When you record partial payments, QuickBooks applies the payment to the invoice line items in order. Additional payments apply to the next line items until the payment is complete.

If you make a bank deposit with several cheques in a single deposit, use the Undeposited Funds account to record the payments in QuickBooks. This lets you group multiple payments into one deposit transaction. Only do this if your bank recorded multiple payments as a single deposit.

When a customer overpays an invoice to give you a tip, you need to record the income. Here's how:

  1. Add an income account to track tips:
    • Go to Settings ⚙ and select Chart of accounts.
    • Select New.
    • For Account Type, select Other Income.
    • For Detail Type, select Other Miscellaneous Income.
    • Enter a Name, like "Tip Revenue" and select Save and Close.
  2. Create a tip item:
    • Go to Sales and select Products & services (Take me there).
    • Select New, then Non-stock.
    • Enter a Name, like "Tips."
    • For Income account, select the account you created in step 1.
    • Select Save and close.
  3. Record the extra money as a tip:
    • Go to Sales, then select Invoices (Take me there).
    • Select Create invoice.
    • Enter the Customer. In the Products/Services field, select the tip item you created in Step 2.
    • Select Save. If your credits are set up to apply automatically, you're done. Otherwise, select Receive payment.
    • Select the credit and then Save and close.

Note: If your customer paid you too much in error, you should contact them and arrange for a refund.

Record invoice payments

After you process a payment from a customer, you need to record it in QuickBooks so the invoice is marked as paid. Otherwise, the invoice stays open and remains unpaid on your reports. You can record the full or partial payment on an invoice. Here’s how:

  1. Go to Get paid and select Invoices (Take me there).
  2. Find the unpaid invoice and select Record payment.
  3. From the Deposited to dropdown, select the account you put the payment into.
  4. In the Amount field, enter the amount your customer paid. This can be the full or partial payment.
  5. In the Payment date field, select the date your customer paid you.
  6. Select Save.

If your customer pays you more or less than expected, you can make changes to a payment receipt easily. 

  1. Go to Sales and select Invoices (Take me there).
  2. Locate and edit the payment transaction.
  3. Edit the Amount field.
  4. Select Save and close.

Important notes:

  • QuickBooks will alert you if the transaction you're editing is linked to others.
  • To delete a payment entirely: Open the payment transaction, select More actions, and then Delete. Note that deleting a transaction is irreversible.
  • Flat Rate Scheme: Payments can’t be edited once the corresponding transaction has been included in a VAT return.
  1. Go to Get paid and select Invoices (Take me there).
  2. Open the payment you want to delete. If you are not sure which payment is tied to the invoice that you are deleting the payment for, you can also open the payment by going to the invoice and selecting Payment on.
  3. Select More actions.
  4. Select Void or Delete.


What's next?

For more, explore

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