Customer Payments

Manage customer payments and Undeposited Funds

Handling customer payments correctly ensures your books are accurate and your bank reconciliations run smoothly. Whether you are cleaning up old data, entering opening balances, or fixing bank feed errors, we can help you manage your payments effectively.

Clean up Undeposited Funds from a prior period

If you previously used QuickBooks for billing only and received payments that are still sitting in Undeposited Funds, you need to clear that account to zero. This prevents the funds from appearing as current assets.

To move these funds out without affecting your current income, you can create a deposit and a journal entry dated in the prior year (for example, 12/31 of the previous year).

1. Create a deposit:

   • Select the + New button and choose Bank Deposit.
   • Select the payments sitting in Undeposited Funds.
   • Choose the correct Bank Account.
   • Set the date to the last day of the prior year (or your preferred closing date).
   • Select Save and close.

2. Offset the income:

   • Select the + New button and choose Journal entry.
   • Set the date to match the deposit you just created.
   • On the first line, Credit the checking account for the total amount.
   • On the second line, Debit the original Income account used on the invoices.
   • Select Save and close.

This process moves the money to the bank register on paper and zeroes out the income recorded for that period.

Enter opening balances for customers

When setting up your company file, you may need to enter balances for customers who owe you money (Accounts Receivable). You have two options depending on how much detail you need.

• Enter individual unpaid invoices: Use this method if you want to keep track of specific sales or bills that make up the balance. This provides a detailed history for each customer.
• Enter a total opening balance: Use this method if you only need the total amount owed and do not need to track individual historical transactions.

To enter a single opening balance for a customer:

1. Go to Settings (the gear icon) and select All Lists.
2. Choose Customers.
3. Select the customer to open their profile.
4. Select Edit.
5. In the Opening balance field, enter the total amount owed as of your start date.
6. Select Save and close.

Fix bank feed matching and miscategorized transactions

Sometimes, transactions downloaded from your bank may not match automatically, or payments may be recorded incorrectly. Here is how to resolve common issues:

• Payments stuck in Undeposited Funds: If you see a lump sum in your bank feed but individual payments in Undeposited Funds, you need to group them. Go to + New > Bank Deposit, select the relevant payments, and save. Then, return to the Banking screen and match the downloaded bank transaction to this new deposit record.
• Deleting reconciled entries: If you need to delete a deposit that has already been reconciled, you must first undo the reconciliation or be prepared to reconcile again. Generally, it is safer to delete the unreconciled transaction (such as the individual payment) and then edit the reconciled deposit to remove the incorrect income account line item.
• ACH and Merchant Service payments: If you use QuickBooks Payments (Merchant Services), the system often records the payment and clears the invoice automatically. When the funds hit your bank account, ensure the deposit in QuickBooks matches the bank feed total so they reconcile correctly.

Record payments without an invoice

If you receive money that is not tied to a specific invoice (for example, a donation or a generic cash sale), you do not need to create a customer payment first.

1. Select the + New button.
2. Choose Bank Deposit.
3. In the Add funds to this deposit section, enter the details:
   • Received from: (Optional) Enter a name or leave it blank.
   • Account: Select the appropriate income account (e.g., Miscellaneous Income).
   • Payment Method: Select Cash, Check, or other relevant type.
   • Amount: Enter the payment amount.
4. Select Save and close.

This records the income directly into your bank account without affecting Accounts Receivable.

Report on customer payments

To see a detailed list of payments by customer, you can customize the Transaction List by Customer report.

1. Go to Reports and search for Transaction List by Customer.
2. Select the report to open it.
3. Select the Customize button.
4. In the Filter section, locate Transaction Type and select Payment (or select “Invoice” and “Payment” to see both).
5. In the Rows/Columns section, ensure the Number and Date columns are displayed.
6. Select Run report.

Note: Customer Statements are designed to show invoices, credit memos, and statement charges. They do not display sales receipts. If you need to report on sales receipts, use the Sales by Customer Summary or Transaction List by Customer report instead.