Using QuickBooks Desktop Pro, we create invoices with several items on them. If a customer makes a partial payment (or specifies how their payment is to be applied against the invoice's items), how can we apply that payment to a specific item on the invoice and not just toward the overall total of the invoice? Does using cash vs accrual method make a difference?
Hi there, ckokaram.
In QuickBooks, payments are applied to the overall total of an invoice, not per line item. Here's how to record the partial payment.
When a customer pays you for an open invoice, you need to enter the payment in QuickBooks. Recording invoices is part of the Accounts Receivable workflow.
Also, cash and accrual are two methods of reporting income and expenses. The same report can paint a different picture depending on the method you pick. Here's a link to learn how these two methods work in QuickBooks: Differentiate Cash and Accrual basis.
Keep me posted if there's anything else you need about applying a partial payment to an invoice. I'm always around to help you.
Welcome back, ckokaram.
I can share additional information about applying invoice payment to specific line items.
Currently, it isn't possible yet to apply the payment to invoice line items. For now, it will automatically be applied to the overall total as stated by my colleague above.
I understand how important it is for you to have these features in QuickBooks Desktop Enterprise or Pro. The addition of this feature is a fantastic idea for future development. I recommend submitting your product suggestion. Our Product Development team will review your request. Once approved, they might include it in future updates.
In addition, I've added this article to learn how to filter your report to display only the information you need: Customize reports in QuickBooks Desktop
Please don't hesitate to add any details below if you have further questions about applying for payments. We're always here to help you.
Thank you for asking this question, I also need to be able to apply a payment to a specific item on an invoice. I have had to start doing individual invoices for all of the items in order to do this and it is a pain in the butt. Quickbooks could you please add this option for those of us who need to apply a specific payment to a specific item on an invoice. thank you so very much. Heidi
This doesn't seem to be true in my experience. I have invoices with multiple items and each item has a different sub-class assigned to it.
If I enter a partial payment, that payment somehow gets spread, seemingly randomly, over the different items. I can see this fact on the Balance Sheet By Class report.
Example: Invoice total is for $74921.33 split amongst sub-classes as follows:
I apply a payment of $1,150.22 to that invoice. On the Balance Sheet By Class it shows the following amounts as "Undeposited Funds":
with a total "Undeposited Funds" of $1150.22
So how do you explain that? And how does it decide how much to apply to each sub-class? It appears to do it by percentage. For example, the $6811.03 sub-class is 9.09% of the total invoice and it's corresponding payment amount of $104.57, which is about 9.09% of the payment amount of $1150.22.
So this is not true: "In QuickBooks, payments are applied to the overall total of an invoice, not per line item."
Let me add more details to clear up your confusion about the calculation, @Rick.
I understand that knowing the exact percentage of how much can be deducted per item is important. I'd be happy to provide a sample calculation to guide you appropriately.
If there is only one item on the invoice or no classes are assigned, the payments will be automatically subtracted from the overall sum. But if there are multiple items with different classes, the percentage that can be deducted per item depends on how much you partial.
Based on your example, the $1150.22 (partial payment) is 1.53% of $74921.33. That said, QuickBooks will use 1.53% per line item. See the sample calculation below for more understanding.
$1150.22 / 74921.33 * 100 = 1.53%
$1040.05 / $67745.30 * 100 = 1.53%
$5.60 / $365.00 * 100 = 1.53
$104.57 / $6811.03 * 100 = 1.53 %
Moreover, check out these articles below on how to customize reports by class in QuickBooks and know the sample classes by industry:
This thread is open if you still need clarification about calculating the amounts in QuickBooks. I'm happy to explain this to you further and provide more examples. Keep safe.
Thanks. Yes, that's another way of doing the calculation.
The main point is, that the post from MaryLandT above is in error where it says "In QuickBooks, payments are applied to the overall total of an invoice, not per line item."
RE: the post from MaryLandT above is in error where it says "In QuickBooks, payments are applied to the overall total of an invoice, not per line item."
Yes, that is conceptually incorrect, a common problem among Intuit reps here on the community.
While you can't control how a payment is applied, it is more accurate to describe the case as the payment being applied on a pro-rated basis across the invoice line items, and also to the invoice total in its entirety, to reduce the open balance, which is tracked on the AR accounting row.
The way it's applied can seem convoluted when there are credits, discounts, and other special case line items on the invoice, but it's quite predictable and accurate.
I'm back! Still having issues with the way QB applies invoice payments to the various classes on the invoice.
Is there ANYWAY to choose how the payment is applied to the classes? I do not like the way QB does it by percentages. Sometimes that's fine, but not always.
Let's say an invoice has 5 items with 2 different classes. Three of the items are coded to class ABC and two of the items are coded to class XYZ.
The invoice is for $100K and that is paid in full with one deposit.
If I then do a balance sheet for just class ABC, it will say that money is still owed on that invoice for ABC even though the invoice was paid in full, because of the way QB allocates the payment to the five line items.
There has to be a solution. This is a terrible system. QB needs to fix this.
RE: Is there ANYWAY to choose how the payment is applied to the classes? I do not like the way QB does it by percentages. Sometimes that's fine, but not always.
No, there isn't.
The balance sheet won't use the classes on the detail lines of the - in most cases - because they to use balance sheet accounts. It uses the class at the top of the invoice, the class associated with the Accounts Receivable line item.
Notably, generally class tracking was originally implemented for your P&L, for income and expenses by class. Later, Intuit added the class field to the overall transaction, like the AR account for an invoice, or the bank account for a check, and that line item, like all the others on a transaction, can have one class associated with it. Never more than one. A balance sheet by class will never see the classes you've entered on the detail lines of a transaction, unless they themselves use balance sheet accounts - and then it might, but I'm not quite sure.
I'm not totally clear about your last sentence: "A balance sheet by class will never see the classes you've entered on the detail lines of a transaction, unless they themselves use balance sheet accounts - and then it might, but I'm not quite sure."
When I create an invoice with different classes for the line items, they do in fact show up on the balance sheet as a separate column.
RE: When I create an invoice with different classes for the line items, they do in fact show up on the balance sheet as a separate column.
I expect that would happen if those line items impact balance sheet accounts, such as when selling inventory items. Is that the case?
This has been a problem for years. It should be corrected. One should be able to apply payments by line item, to reflect the actual intended payment from a customer and not have pro-rata percentage balances. This is confusing and incorrect accounting. I hope to hear that this will be looked at by the team that does the programming for this. I tried to send in a request online and as we have a desktop version I do not have that option in the help area.
I appreciate you for joining the thread, @Teresa 5. I'll help you with this so you can send a feature request to our Product Development Team in QuickBooks Desktop (QBDT).
You'll want to navigate to your Help menu inside your QuickBooks Desktop company. I'll gladly input the steps below with a screenshot to guide you in sending your request. To begin, here's how:
For visual reference, see the photo attached below:
Additionally, here's an article in case you'd like to create custom templates for your forms: Use and customize form templates.
You can also check this page about modifying a report and adding other details to it in QBDT: Customize reports in QuickBooks Desktop.
I'll be here in the Community space in case you have any additional QuickBooks-related concerns, @Teresa 5. Take care, and have nice day!
I'm wondering if QB's is even trying to make this correction? This is really terrible and things like this continue to make QB's not worth the price. But when you have 5 years worth of QB's transactions, I guess you have to bear it?
Thank you for sharing your thoughts and suggestions with us, @dedmonds. We highly value customer ideas in the QuickBooks Community as they are essential for our learning, growth, and development. Your contribution is greatly appreciated.
I understand that this experience may not be what you were hoping for. However, I am here to assist you in providing feedback. The more feedback we receive regarding a specific feature, the higher the likelihood of it being implemented. If you have any other ideas or suggestions that you'd like us to look into, you can send them to us by following these steps shared by my colleague KurtKyle_M above.
For more information about tracking the customer transaction, you can browse this page: Accounts Receivable workflow in QuickBooks Desktop.
If you have any questions regarding your invoices or payment transactions in our system, I am always available to assist you. Simply leave a comment below and I will be happy to help. Have a great day.