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Intuit

Common issues when applying a payment

Learn how to resolve common issues when applying payments on an invoice.

There are different processes in making payment in your QuickBooks Desktop for Mac. Here are some situations on what to do and how to apply a payment on an invoice.

Apply a payment to an invoice

Step 1: Create a cash payment item 

Create a cash payment item when a customer makes a partial payment.

  1. Go to Lists, then select Item list.
  2. Select the + icon to create a new item.
  3. From the Type ▼ dropdown, select Payment.
  4. On the Item Name/Number field, type Cash Payment.
  5. Select Group with other undeposited funds if you want the payment to go to your Undeposited Funds account. Otherwise, select Deposit To and from the dropdown, select the bank account you want the payment to be deposited to.
  6. Select OK.

Step 2: Create an invoice

Create an invoice when a customer pays you in full or settles the remaining amount.

  1. Go to Customers menu, select Create Invoices.
  2. On the Customer:Job ▼drop-down, select a customer or customer job. If the customer or job is not on the list yet, add a new customer.
  3. Fill in the information needed: Date, Invoice #, Bill to/Sold to, and Terms.
  4. In the detail area, select the item(s).
    Note: You need to use two separate lines for items that will be paid by cash and credit card. Use two separate lines for items paid by cash and credit.
  5. Select the Cash Payment item you created in step 1. On the amount column, enter the amount of the item(s) that will be paid by cash.
  6. Select Save.

Correct and re-apply payments applied to a wrong invoice

If you apply a payment to the wrong invoice, you can edit the payment transaction to correct it.

  1. Go to Lists then Chart of Accounts.
  2. Select History.
  3. Double click the payment transaction you want to change.
  4. Correct the error in the Receive Payments window. 
  5. Select Save.

To keep QuickBooks from automatically applying for payments, you need to set your payment preference.

  1. Go to QuickBooks, select Preferences.
  2. Select Sales and Invoicing.
  3. Check or uncheck the Automatically apply payments as preferred.

Apply existing deposit to an open invoice

Create a customer credit from an existing deposit and apply this credit on an open invoice.

Note: You may need to talk to your accountant before following these steps. It may change accounts affected, like payments deposited in a closed account.

  1. Open the original deposit.
  2. In the Received From column, enter the customer name used on the original invoice.
  3. Delete the payment from the deposit.
  4. Look for the original payment transaction to edit.
  5. Redeposit the payment.

Apply a payment from one customer that has invoices in more than one A/R account

Use the following steps if your customer sent one payment to cover several invoices that are in different Accounts Receivable (A/R) accounts.

Note: QuickBooks only allows one A/R account per Journal Entry, we need to use a wash account when moving balances between A/R accounts.

Step 1 : Apply the check amount to Invoice(s) in one of the A/R accounts

  1. Go to Customer menu, then select Receive Payments.
  2. Select the A/R Account ▼ dropdown, then select the first A/R account.
  3. Enter the full amount of the check.
  4. Choose the Invoice(s) you want to apply the payment, leave the remainder as a credit.

Step 2 : Move the credit from the first A/R account to a 'wash' account

  1. From the Company menu, select Make General Journal Entries.
  2. On the first line, choose the first A/R Account then enter the Customer name and the amount in the Debit column.
  3. On the second line, choose (or create new) a ‘wash’ account and in the Credit column, enter the amount you want to move from the’ A/R1’ account.
  4. Select Save.

Step 3 : Move the credit from the 'wash' account to the second A/R account

  1. From the Company menu, select Make General Journal Entries.
  2. On the first line, choose the second A/R account, enter the Customer name and enter the amount in the Credit column.
  3. On the second line, choose the ‘wash’ account then enter the amount in the Debit column.
    Note: Continue with Journal Entries until you have all the credit spread to the different A/R accounts with the customer name attached. When you are done, the balance to the ‘wash’ account should be zero.

Step 4 : Apply for the credits in the remaining A/R accounts to the invoice(s)

  1. From the Customers menu, select Receive Payments.
  2. Select the Customer:Job and the A/R Account.
  3. Highlight the invoice you want to apply the credit to.
  4. Select Apply Existing Credits checkbox .
  5. Use the available credit to pay the invoices.

Edit Customer payment that was recorded incorrectly

  1. Locate the invoice with the incorrect payment amount applied.
    Tip: The invoice will have a Paid stamp on the screen.
  2. Select History, then select the payment transaction.
  3. Change the amount of the payment to the amount you received.
  4. Select Save.
  5. Select Save when the Leaving Transaction window appears with the following message: This payment has been used to pay Invoices. Changing it will alter the way it is applied to those Invoices. Do you want to change it anyway?

Your customer paid your vendor directly for the materials you used to provide service to them

Step 1 : Receive payment from the customer 

  1. From the Customer menu, select Receive Payments.
  2. Select the customer/job.
  3. Choose the invoice and enter the amount that the customer is paying.
  4. Select Save.

Step 2 : Create a clearing account

  1. From the Lists menu, select Chart of Accounts.
  2. Select + icon to add a new account.
  3. Select Income as the account type, then select OK.
  4. Use Clearing as the account name, then select Save & Close.

Step 3 : Create two journal entries 

  1. From the Company menu, select Make General Journal Entries.
  2. If needed, assign the Date and Entry No.
  3. The first journal should be Credit to Accounts Receivable and Debit to Clearing account. Make sure to select the right customer in the Accounts Receivable line.
  4. The second journal should be Debit to Accounts Payable and Credit to Clearing account. Make sure to select the right vendor in the Accounts Payable line.

Step 4 : Apply credit to the vendor's bill

  1. From the Vendors menu, select Pay Bills.
  2. Select the appropriate vendor and bill.
  3. Select the journal entry you created to zero out the bill.
  4. Select OK.

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