Keeping Track of Customer Payments in QuickBooks 2003 - dummies

Keeping Track of Customer Payments in QuickBooks 2003

If your customers don’t always pay you up-front for their purchases, you need to record another type of payment — the ones that customers make to pay off or pay down what you’ve invoiced them. To record the payments, of course, you need to first record invoices for the customer. If you issue credit memos that customers can use to reduce the amounts they owe, you also need to first record credit memos for the customer. The rest is easy.

To access a wealth of customer information all on one page, choose Customers –> Customer Center. The Customer Center appears, listing outstanding balances, unbilled time and costs, and customers by profitability.

To display the Receive Payments window, simply choose Customers –> Receive Payments. Or select Customers from the Navigators list and then click the Receive Payments icon. Then describe the customer payment and the invoices paid. For the gory details, read through the following steps:

1. Choose Customers –> Receive Payments.

The Receive Payments window appears.

2. Identify the customer and, if necessary, the job.

Activate the Customer:Job drop-down list and select the customer or job by clicking it. QuickBooks lists the open, or unpaid, invoices for the customer in the big Outstanding Invoices/Statement Charges list box at the bottom of the window.

3. Give the payment date.

Press Tab to move the cursor to the Date text box and type the correct date in MM/DD/YY format.

4. Enter the amount of the payment.

Move the cursor to the Amount line and type the customer payment amount.

5. (Optional) Specify the payment method.

Activate the Pmt. Method drop-down list and select the payment method.

6. (Optional) Give the check number.

Move the cursor to the Ref./Check No. line. Then you type the check number from the customer’s check. Do you need to complete this step? Naw. But this bit of information may be useful if you or the customer later have questions about what checks paid for what invoices.

7. (Optional) Add a memo description.

Use the Memo description for storing some bit of information that will help you in some way. Note that this field prints on the Customer Statement.

8. Decide how you want to handle the payment.

The option buttons in the lower left corner of the window should look somewhat familiar because they also appear in the Enter Sales Receipts window. These options enable you to designate whether to group the payment with other undeposited funds or deposit it directly to an account.

9. If the customer has any outstanding credits, decide whether to apply them in this payment.

QuickBooks totals the amounts of any of the customer’s existing credits. They could be anything from an overpayment on a previous invoice to a return credit or anything else.

If you want to apply a credit memo to a specific open invoice, select the invoice and then click the Set Credits button. When QuickBooks displays the Credits tab of the Discount and Credits dialog box, click the credit memo you want to apply.

10. Identify which open invoices the customer is paying.

As long as you have the Automatically Apply Payments preference selected, QuickBooks automatically applies the payment to the open invoices, starting with the oldest open invoice. You can change this application by entering amounts in the Payment column. Simply click the open invoice’s payment amount and enter the correct amount.

You can leave a portion of the payment unapplied, if you want to. You also can create a credit memo for the unapplied portion of a customer payment by clicking the Print Credit Memo button.

If you want to apply the customer payment to the oldest open invoices, click the Auto Apply button. If you want to unapply payments that you’ve already applied to open invoices, click the Clear Selections button. Clear Selections and Auto Apply are the same button. QuickBooks changes the name of the button depending on whether you’ve already applied payments.

11. Adjust the early payment discounts, if necessary.

If you offer payment terms that include an early payment discount, QuickBooks reduces the open invoice original amount (shown in the Orig. Amt. column) by the early payment discount you specify to calculate the adjusted amount due (shown in the Amt. Due column).

To specify the discount, select the open invoice that has the early payment discount that you want to change. Then click the Discount Info button. With little or no hesitation, the Discount tab of the Discount and Credits dialog box appears. Type the dollar amount of the discount in the Amount of Discount text box. Then specify the expense account that you want to use to track early payment discounts by activating the Discount Account drop-down list and selecting one of the accounts. (Interest Expense is probably a good account to use, unless you want to set up a special early discounts expense account called something like Discount Expense or Discounts Given. After all, early payment discounts amount to interest.)

When you’re finished, click OK to return to the Receive Payments window.

12. Record the customer payment information.

After you identify which invoices the customer is paying — the unapplied amount should probably show as zero — you’re ready to record the customer payment information. You can do so by clicking Save & New or Save & Close. QuickBooks saves the customer payment shown on-screen. If you click Save & New, QuickBooks then displays an empty Receive Payments window so that you can enter another payment.

You can return to customer payments you recorded earlier by clicking the Previous button.