Monday we did a QuickBooks support and training due to an issue with accounts receivable that an educational consultant client discovered in his books. This training was a good reminder of the accounts receivable process and how important it is to follow the workflow in QuickBooks.
The client was invoicing his clients and receiving payment which cleared the client’s balance. However, failed to complete the last step and make Deposit to the check register. Since the deposits weren’t showing up in his check register, he added a new deposit and booked it to Sales. He missed a critical step.
Good rule of thumb in QuickBooks if you are invoicing your clients:
- RECEIVE payment against the client and deposit to your checking account in QuickBooks. All done.
- If you have multiple checks to deposit or need to record bank fees, or cash back, receive payment to UNDEPOSITED FUNDS.
- Make Deposit, select invoice, enter adjustments, and then make DEPOSIT to the checking account to put it into your checking register.
In reviewing your QuickBooks, this to look for:
- Your income account in QuickBooks should have the transaction type Invoice, Sales Receipt, or Credit.
- If you see the word deposit, open it and make sure the deposit is made up of invoices from undeposited funds.
- If you see the word deposit, and it is booked to Sales/Services or another income account, it is wrong and you are potentially overstating sales. We don’t like to pay taxes on stuff that isn’t real.
- If you see the word check, this could be a refunds booked against sales. This is OKAY.
If you need a second pair of eyes to review your books or you’re not sure your QuickBooks is reporting correctly, please feel free to contact our office for a free consultation.
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