Learn how to enter a prior balance for a customer that owes you money or a vendor you need to pay.
If you’re new to QuickBooks Online, you might have customers or vendors with open balances. We’ll show you the recommended way to manage those balances as you're creating your customer and vendor profiles.
When to use opening balances
Opening balances are important when you're connecting a bank or credit card to QuickBooks Online. They help ensure that QuickBooks matches your bank records exactly, from the date you started with QuickBooks. But new customers and vendors are different. You have the option to enter opening balances when you’re creating new customer or vendor profiles, but it’s not recommended.
How to manage customer and vendor balances
If you have customers and vendors that have an open balance prior to the date you opened your QuickBooks Online account, it's recommended to leave the opening balance blank. Instead, add your customer's unpaid invoices or your vendor's unpaid bills to QuickBooks. This lets you add clear details about what your customers are paying for and what you're paying your vendors for.
To get started, select whether you're adding a customer or vendor.
Add unpaid invoices for a new customer
Here's how to get started:
- When adding a new customer, leave the Opening balance blank.
- Select Save.
Then, create any unpaid invoices for the customer:
- Go to Customers & leads, then select Customers (Take me there).
- Select the customer.
- From the New transaction ▼ dropdown, select Invoice.
- Then, create a new unpaid invoice for the customer.
- Make sure the Invoice date is the actual date you provided the products or services.
- Repeat for any other unpaid invoices for this customer.
Important: Only add unpaid invoices. Don't add any transactions for this customer that were paid and closed before you started using QuickBooks.
Add unpaid bills for a new vendor
Here's how to get started:
- When adding a new vendor, leave the Opening balance blank.
- Select Save.
Then, create any unpaid bills you owe the vendor:
- Go to Expenses, then select Vendors (Take me there).
- Select the vendor.
- From the New transaction ▼ dropdown, select Bill.
- Then, create a new unpaid bill for the vendor.
- Make sure the Bill date is the actual date you received the bill.
- Repeat for any other unpaid bills for this vendor.
Important: Only add unpaid bills. Don't add any transactions for this vendor that were paid and closed before you started using QuickBooks.
What if I already added an opening balance?
If you entered an opening balance instead of leaving it blank, don't worry. We'll show you how it affects your books, and what to do next.
To get started, select whether the balance was for a customer or vendor.
Find a customer opening balance
When you add a customer opening balance, QuickBooks creates a generic invoice for the customer. Invoices affect Accounts Receivable (A/R) and Income accounts.
- Accounts Receivable (A/R): This means the customer still owes you money. The invoice will stay in accounts receivable until it's paid.
- Income: The invoice is assigned to a nonspecific income account (like Sales).
Since the invoice is generic, it's unclear what the customer is paying for. To avoid any confusion later, you can add specific details to the invoice, or delete it.
- Go to Expenses, then select Customers (Take me there).
- Select the customer.
- Find and select the Opening balance invoice.
Then, you can add the specific products or services you provided:
- In the Product/Service column, select the ▼ dropdown and choose another item or add a new line, as needed.
- The products or services you select determine the income account(s).
- Select Save and close.
Or, you can void or delete the invoice and follow the steps above to add the specific invoices the customer hasn't paid yet.
If you're not sure which option to choose, check with your accountant. Don't have an accountant? We can help you find a ProAdvisor.
Find a vendor opening balance
When you add a vendor opening balance, QuickBooks creates a generic bill for the vendor. Bills affect Accounts Payable (A/P) and Expense accounts.
- Accounts Payable (A/P): This means you still need to pay the vendor. The bill will stay in accounts payable until it's paid.
- Expense: The bill is assigned to a nonspecific expense account (usually Other Miscellaneous Expense).
Since the bill is generic, it's unclear what you're paying for. To avoid any confusion later, you can add specific details to the bill, or delete it.
- Go to Expenses, then select Vendors (Take me there).
- Select the vendor.
- Select the Opening balance bill.
Then, you can add more specific expense details:
- Change the expense account in the detailed line item of the bill or add a new line as required.
- Select Save and close.
Or, you can delete the bill and follow the steps above to add each bill you'll need to pay.
If you're not sure which option to choose, check with your accountant. Don't have an accountant? We can help you find a ProAdvisor
