How to record an invoice payment

[0:00] Once your customer pays your invoice, you need to record it in QuickBooks. Let's go over two ways you can receive payment and how to properly use the undeposited funds account to keep your books accurate. The first way you can receive your payment is to select Customer Hub from my apps. Then select Customers. This shows your customers list.

[0:22] Just find your customer and you will see the money they owe you here. To receive a payment, you can select Receive payment right here. However, another way to receive payment is to select Create, and then select Receive payment. Then enter the customer's name. QuickBooks displays any open invoices for that customer. Select the checkmark box for the invoices the customer is paying.

[0:49] QuickBooks assumes that the customer is paying the entirety of the invoice, but if this is a partial payment, you can change the payment amount. Next, record how the customer paid you. If you don't see their payment method listed, just select Add new, and add it. This customer is paying with a check.

[1:08] You don't always need to record a reference number, but since this customer is paying with a check, let's record their check number. Let's select Undeposited funds so we can combine it with other payments later. The Undeposited funds account is a temporary account that holds payments you plan to deposit later at the bank.

[1:26] An undeposited funds account is important, because it allows you to easily combine several payments together into a single deposit. If you don't combine deposits, then you can skip this and just select your bank account. Then select Record and close. Now, this customer has a $0 balance since they paid their invoice. If you recorded the money going directly into a bank account, you're done.

[1:50] But if you used undeposited funds, you'll need to record the deposit after you put it in the bank. To see this process, watch our video on how to record a bank deposit. Now try recording an invoice payment of your own.