Working with deposits and invoices that don't align

sjdkng · ‎October 14, 2022

Thoughts on streamlinging this process please:

Background: multiple customers, invoices created in QBO. Customers have a tendency to bulk pay invoices, but may also under pay, overpay, or sporadically pay. If we start with the following:

Customer 1	Customer 2
Inv1 $1000	Inv1 $500
Inv2 $1000	Inv2 $1000
Inv3 $500	Inv3 $1000
Inv4 $500	Inv4 $1000
Inv5 $1000	Inv5 $1000

We might find that Customer 1 sends a check to pay Inv2, Inv3, Inv5, despite Inv1 being unpaid (and being created earlier).

Currently, when the company receives the payment they create a receive payment in QBO and mark it against the invoices. Then we would try to match that receive payment against the check deposit.

The issues
It is time consuming to create the receive payment transaction and to mark it against the invoices.
Despite the effort, it doesn't always help match up the deposit, because there are multiple customers, therefore it isn't clear whether the check deposit is for Customer 1, 2, or X.

Idea (for your input, or an alternative idea that is better)
Any check deposits are booked into a customer account (like a credit balance).
Payments are made against any open invoice from the customer account periodically and used in full.
This may result in partially paid invoices or in a credit balance for the customer (since they sometimes over/under pay).

If the above is viable, how would we associate the check deposits with the customer account effectively? I could see them being placed directly into the balance sheet, but was wondering if there is a better way to connect them to the customer/invoice section of QBO, so when we open the customer we see the balance outstanding as a positive/negative figure.

I guess the issue is that it is proving too cumbersome to track on a per-invoice basis so we could instead track on a per-customer basis, but not sure if this is a good approach, or if there is a better way to track on a per invoice basis?

MariaSoledadG · ‎October 14, 2022

Thank you for the details that you've illustrated above. I can see the importance of being able to track payments to each invoice. Let me provide some information on how you're going to associate payments to your invoice, sjdkng.

QuickBooks Online (QBO) lets you link bank deposits to an invoice. This will keep your record more accurate and helps avoid errors when it's time to reconcile your accounts.

Also, when processing payments in QuickBooks Online with QuickBooks Payments, you'll have to connect an existing QuickBooks Payments account. Then, set this up so your customers can pay invoices online. Once done, you are now ready to process payments.

Select + New.
Select Receive payment.
From the Customer dropdown, choose a customer.
In the Outstanding Transactions section, select the unpaid invoice you wish to apply the payment toward.
Tip: To apply for a partial payment, change the amount in the Amount Received field.
In the Payment method dropdown, select the payment method.
- For Credit card: Select Enter credit card details and enter the card info. Or, if you have a Magtek card reader, select Swipe Card and swipe their card. Select Process credit card and then Save.
- For a Check: make sure you get a signed authorization form. This lets customers give you permission to debit their accounts.
Select Save and close.

For more detailed steps with the process and how customers can pay for invoices by credit card or ACH bank transfer, I've added this article for more details: Take And Process Payments In QuickBooks Online With QuickBooks Payments.

Aside from that, when a customer pays an invoice, you'll have to record the payment to connect to the invoice. Thus, to balance your account. To learn how to record these payments, check out this article for your guide: Record Invoice Payments In QuickBooks Online.

QuickBooks automatically downloads the latest transactions once you connect your bank and credit card accounts. To know on how to add and match with those you've already entered in QuickBooks, consider reading this article for future reference: Categorize And Match Online Bank Transactions In QuickBooks Online.

Drop your comment if you have further questions about payments and invoices. I'll be right here to help.

sjdkng · ‎October 14, 2022

My question relates to check deposits from the customer.

Nicole_N · ‎October 14, 2022

Welcome back, sjdkng.

For now, what we can suggest is to deposit the payments to Undeposited Funds account. This way, you can combine the payments and match them with the bulk check deposit. You can open the received payment and change the Deposit to account to Undeposited Funds.

Get to know more information about this process through this link: Deposit payments into Undeposited Funds account in QuickBooks Online.

If you're using QB Payments, you can check this link on how to match bank deposits to the corresponding QuickBooks Payments transaction: Automatic matching for QuickBooks Payments.

Please don't hesitate to contact us again if you have any other concerns about check deposits. I'm always around to help. Have a nice day!

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Working with deposits and invoices that don't align