Welcome to the Community, @katieabbott888.
I can provide some information about recording the payments.
In QuickBooks Online, there are two ways to record payments received from customers. You can either use Invoice and Receive Payment for deferred transactions or Sales Receipts for immediate payment.
For cash payment, you can use the Sales receipt option to record your sales. During the process, you have the option to add VAT on your items if inclusive of tax (see sample screenshots below).
Additionally, here are some helpful references that you can check out about entering transactions, as well as setting up VAT:
Let me know in the comment section below if you have any other questions. Have a great day ahead.
Thanks for the help, the issue comes that I would like to reflect a credit on my customer account, and raising a sales receipt does not do this as it effectively creates an invoice and a receipt and posting a deposit on the account I cannot allocate VAT when posting to Debtors or Creditors?
There are other ways of posting a credit to your customer's account, katieabbott888.
You can either create a journal entry or a credit note. Both of these options have a VAT column where you can add an amount to it. You can also create a supplier credit to post a credit on a creditor's account.
Follow the steps provided in these articles on how to record them:
Let me know if you need anything else.
Hi, thanks for the response with this,
The problem comes when this is a receipt from a customer on the bank feed, it would mean replacing all these receipts on the bank feed and making manual journals in their place which defeats the object of the bank feed, this is also the same with using a credit note to create the credit, the receipt on the bank feed has to be replaced - it seems off this fundamental transaction cant be reflected?
A payment on account to a supplier can be recorded in this way by recording a cheque and VAT is then allocated on the bank screen, creating a debit balance in the supplier code - however this is not so for a customer receipt
Thanks for the clarification, @katieabbott888.
Let me share some information about creating Journal Entry (JE) in QuickBooks Online (QBO). JE is used as a last resort in recording transactions and to offset some amounts. This will not replace the purpose of the receipt in the banking feed. This is to match the credit or receipt in your bank feeds.
Here's how to create a JE in your QBO account:
You can also use this article for additional reference in creating a JE: Create a journal entry in QuickBooks Online
I suggest getting in touch with your accountant for assistance in choosing the right account. Doing so, will ensure the correctness of your book after recording this.
Also, I got you this article that can guide you in reconciling your accounts accurately: Reconcile an account in QuickBooks Online.
Know that you're always welcome to post here anytime you need help with your QBO account. I'll be here to assist you. Have a wonderful day and always keep safe!
I'm not sure how to word this as the original question from@katieabbott888 has not been answered. Sometimes customers make payment before an invoice is raised and that money needs to be recorded on their ledger account as a credit entry ( not a credit note) until the invoice is raised? Or a customer might overpay or send money in error that will need to be refunded. How do you post this from the bank feed so that it shows on their account?
I've come to help you record customers' advanced payments in QuickBooks Online (QBO), @PlanPractice.
When customers pay you in advance before an invoice is raised, you can record it in QBO in two different ways. You can choose your preferred method that best suits your business needs.
You can choose to record a retainer or deposit when your businesses receive payments from customers before performing any services. Once you invoice the customer, it'll be paid using the money from the deposits. You'll have to undergo six to seven different steps to complete the process.
Create a retainer item.
Create a trust liability bank account (optional).
Create an invoice for deposits or retainers.
Invoice customers for deposits or retainers.
Turn retainers into credits on invoices.
Transfer funds from your trust liability account to your operating account.
For the step-by-step guide, you can check out this article: Record a retainer or deposit. Once done, track how much of a retainer or deposit you're holding for your customer from the Balance Sheet report.
When you opt to record customer prepayment, you'll have to consider how you report your VAT to HMRC. There are two options that you can choose from with this process. For the detailed steps per option, I'd recommend checking out this article: How to record Customer prepayments for Products or Services.
Once done, visit the Banking menu to review your bank feeds. You'll have to match the entries to your downloaded bank transactions. This way, you can keep your account updated and make sure your entries match with your real-like bank transactions. For the step-by-step guide, you can refer to this article: Categorise online bank transactions in QuickBooks Online.
Also, I'd recommend pulling up a sales and customers report (i.e., Sales by Customer or Customer Balance). This way, you can monitor your customers' transactions accordingly. Just visit the Who owes you and Sales and customers sections from the Reports menu's Standard tab.
Let me know how it goes in the comments below. If you have other concerns about recording customer payments and managing sales transactions in QBO, I'm just around to help. Take care always.
Thanks Rea_M but I have found the answer in another post.
What you describe above is a very complex set of entries for something that should be a very simply double entry. My client would never understand it. All I wanted to do was show a balance on the customer ledger account.
Thanks for trying though