Introduction

Processing sales and receipts are critical activities of small businesses. Not only must you follow practices that increase cash flow and protect the company’s cash from misuse, but you must process it accurately to productively manage the company’s cash flow and maintain good customer relations.

This chapter provides bookkeepers with step-by-step guidance for processing sale and receipt transactions.

The guidance in the chapter is useful to bookkeepers as well as personnel involved in sales and receipts activities. The chapter helps sales and receipts personnel fine-tune their processing activities and provides newly hired or cross-trained employees with a foundation for processing sales and receipts.

Accounting Process Automation

Accounting process automation automates traditional routine manual sales and receipts processes. Automation improves the speed, accuracy, and reliability of everyday transactional documents such as sales receipts, invoices, payments, credit memos, and refund receipts.

This chapter uses accounting process automation to efficiently and productively process sales and receipts with QuickBooks.

Important: In this chapter we address processing sale and receipt transactions. To automate routine sale and receipt transactions, we utilize online bank and credit card connection set up. This feature allows QuickBooks to automatically import your company’s sale and receipt transactions directly from your company’s online bank account. This feature improves the speed, accuracy, and reliability of recording sale and receipt transactions because you’re no longer required to manually record or create these transactions.

Hypothetically, if all your company’s sale and receipt transactions flowed through your QuickBooks connected bank account, you wouldn’t need to manually record any sale and receipt transactions. Processing sale and receipt transactions would be as easy as importing and reviewing the transactions and reconciling the bank account. However, not all your company sale and receipt transactions that flow through your bank account provide you the information you may need or want.

For example, if you sell your products or services on account (credit sales) you need to record an invoice. When you receive an invoice payment you need to record a payment receipt. If you issue a customer a credit on their account or refund you need to record a credit memo or refund receipt. If you only import your company’s sale and receipt transactions directly from your company’s online bank account, your accounting system will only record the payment receipt and refund receipt. The payment and refund information will display in your profit and loss report, but the timing of the sale or refund information will be off. To be useful, accounting information must be timely, relevant, and reliable. You also will not have the accounts receivable information necessary to monitor and collect money owed to you.

Throughout this chapter, we provide instructions and step-by-step procedures to enable you to manually record sale and receipt transactions for those times when you need or want to.

When we work with new clients, we set up their accounting system using QuickBooks connected bank and credit card automation. We monitor the financial information the system is communicating and add manual procedures as necessary to communicate the client’s financial position, profit, and cash flow.

Sales and Receipts Tools

The following tools are needed to process sales and receipts:

• QuickBooks
• QuickBooks Online Payments
• Company online bank account(s) compatible with QuickBooks

Bookkeeper Tasks

Your sales and receipts tasks include:

1. Manage Customers
2. Record advance payment and cash sales
3. Record sales on account (credit sales)
4. Record sales refunds
5. Record bank deposits
6. Monitor and collect unpaid invoices
7. Email sales and receipts reports

Accountant Tasks

Your accountant’s sales and receipts tasks include:

1. Apply for and set up your company’s QuickBooks Online Payments account
2. Set up your company’s Sales settings
3. Set up your company’s Custom Form Styles
4. Set up your company’s Sales Tax setting
5. Provide processing sales and receipts training
6. Support sales and receipts questions or problems
7. Review your monthly sale and receipt transactions and balances
8. Customize, group, and schedule your daily, weekly, monthly, quarterly, and annual sales reports

What are Sales?

Sales are the products or services your company sells. Sales are usually shown at the top item of your income or profit and loss statement from which all your charges, costs, and expenses are subtracted to arrive at net income.

Types of Sales Transactions

There are three main types of sales transactions: advance payment, cash sales, and credit sales. The difference between these sales transactions is in the timing of when payment is received.

1. Advance payment: Customers pay you before the product or service is shipped, delivered, or performed
2. Cash sales (at the time of sale or completion of service): Payment is received at the time the product or service is purchased, shipped, delivered, or performed
3. Sales on account (credit sales): Customers are provided a period of time to pay you after the product or service is purchased, shipped, delivered, or performed

What is the Sales Process?

The sales process is the steps to sell and receive payment for products or services to customers. This set of sequential, interrelated activities is known as the sales process or cycle. The activities involved with a sale depend on how you sell and receive payment for your products and services.

What are Invoices?

Invoices are used for sales on account and should be created daily. Invoices track accounts receivable or money your customers owe you. An invoice is sent to a customer to request payment for the sale.

What are Receipts?

Receipts are cash sales (credit cards, debit cards, eCheck) and payment on a customer’s account. A receipt is the document provided to the customer showing the details of the transaction.

QuickBooks Online Payments

QuickBooks Online Payments, formerly known as QuickBooks Merchant Services, is a QuickBooks add-on credit card, debit card, and ACH bank transfer (eCheck) processing service which seamlessly integrates with QuickBooks. QuickBooks Online Payments enable you to accept advance payment, cash sales, and sales on account credit card, debit card, and eCheck payments online, by mail, phone, and on-site.

Cash Management

The cash management rule pertaining to sales is Receive payment as soon as possible. Therefore, the advance payment policy complies best with the Receive payment as soon as possible rule. However, the policy may not be practical or generally accepted in certain industries or with certain products and services. For example, it’s generally accepted that attorneys receive an advanced payment, referred to as a retainer, for legal services. If you establish an advance payment policy in an industry or with products or services where the policy is not generally accepted, you’re more likely to lose sales.

The cash sales policy doesn’t comply with the Receive payment as soon as possible rule as well as advance payment, but it’s the next best option, and it’s generally accepted for customers to pay for a product or service at the time of purchase, shipping, delivery or completion. One reason for this general acceptance is because that is the time when customers are most appreciative for the product or service. Another reason is because of the use of credit cards. Credit cards have shifted the delayed time to pay from the vendor to the credit card company. In addition, credit cards are more convenient, secure, and often provide the user awards such as cash back or airline miles.

The sales on account policy doesn’t comply as well with the Receive payment as soon as possible rule. The original purpose of sales on account was to increase sales. However, this new policy came with the risk of not getting paid. Today, businesses implement policies to offset that risk such as reviewing a prospective customer’s payment history. However, there are ways to make sales on account policies comply better with the Receive payment as soon as possible rule.

For example, a common invoicing process for a law firm is to invoice clients once a month on a set day of the month, such as the fourth Friday of the month.

Using this process, assume an attorney performs eight hours of service at $400 an hour on Friday, the first day of the month. The attorney creates and mails the $3,200 invoice to the client on the fourth Friday, the 29th of the month. The term of the invoice is Net 30 (the attorney expects to be paid within 30 days of receipt of the invoice). The client mails the invoice payment on the 30th day after receipt of the invoice.

An analysis of the example is the attorney earned $3,200 on the first of the month and was not paid for her services for 60 days. The attorney gave the client a $3,200 interest-free loan for 60 days, assuming two additional days for mailing the invoice to the client and mailing the payment to the attorney.

We can make this invoicing process comply better with the Receive payment as soon as possible rule by doing the following:

1. Change the monthly invoicing from once a month to daily invoicing. In our example, this change would reduce the collection period by 28 days
2. Change the mailing of invoices to emailing. In our example, this change would reduce the collection period by 1 day
3. Change the payment of invoices from mailing to online payment. In our example, this change would reduce the collection period by 1 day
4. Change the term of the invoice from Net 30 to Net 15 or Due on receipt. In our example, this change would reduce the collection period by 15 to 30 days

In our example, four minor changes to this firm’s invoicing policy could reduce the collection period from 60 days to 0 days.

From a cash management standpoint, a company is better off accepting advance payment sales and cash sales and not sales on account. However, there are times when sales on account are unavoidable such as when transacting business with education institutions or government agencies.

When you do accept sales on account, make sure you have an accounts receivable collection policy.

Accounts Receivable Collection Policy

There is a saying in accounts receivable collection: The sooner you get paid, the more likely you’re to be paid. With sales on account, you always face the risk of not getting paid. Therefore, do all you can to eliminate or reduce the risk. Let’s say you sell a product for 150% of its cost. For example, you purchase a product for $100 and sell the product for $150. If you’re not paid for the sale of that product, you would have to sell two more of those products just to break even for the loss.

Another saying in accounts receivable collection is: The squeaky wheel gets oiled first. The company that has an accounts receivable collection policy, and enforces it, is likely to be paid before anyone else. Make sure you have a written and communicated accounts receivable collection policy.

A major requirement of cash flow is ensuring that customers pay their bills. The process of collecting on a sales invoice begins when the invoice is generated and ends when the payment is received.

Invoice Terms

The collection procedure starts with the terms of payment outlined on the invoice. The invoice should have an area that outlines the customer terms, which can be credit terms of Due Upon Receipt, 15 days (Net 15), or 30 days (Net 30). The due date of the payment should be clearly stated, along with the acceptable methods of payment such as credit card, debit card or eCheck (ACH bank transfer).

As an added measure to help ensure your customer pays on time, include a clearly outlined penalty for late payment on the invoice and list a customer service email or phone number for any questions.

Immediately Past Due

When an invoice goes beyond the scheduled due date, send a reminder invoice to the customer. The invoice indicates the invoice number, the due date, the amount due, a customer service phone number, and any penalties that have been added to the invoice. If you would like to offer the customer payment options such as an installment plan, this is the time when you give that information to the customer.

Accounts Receivable Collection Policies and Procedures

See the end of this chapter for a sample Accounts Receivable Collection Policies and Procedures.

Management Customers

Before you start processing sales and receipts, you need to manage your customers.Managing your customers includes:

1. Add a customer
2. Edit customer information
3. Inactivate a customer
4. Merge customers

Customer Information

When you create a cash sale (Sales Receipt) or sale on account (Invoice) you enter the Customer. You can enter the customer when you create a Sales Receipt or Invoice, or you can enter or import all your customers from a customer list. Entering customers is not just a matter of entering their names but entering their profiles. A customer profile is a description of a customer that includes contact, geographic, demographic, and purchase history information.

Customer contact information provides you who-to-contact information and options on how-to-contact them such as an address, phone number, cell number, and email address. Many companies attempt to increase sales by contacting new leads, however, the easiest and least expensive way to increase sales is from your customers and knowing how best to contact them. For example, if you want to introduce a new product or service or have a sales promotion, you could mail, phone, text, or email that information to your existing customers.

Customer geographics are geographic information based on geographies such as city, county, state, region, and country. Geographics help you know where your customers live and where to target the market. For example, do you sell more to one city than another city in your market per capita? If so, your marketing dollars should be more directed to that city.

Customer demographics are characteristic information of your customers such as race, ethnicity, gender, age, education, profession, occupation, income level, and marital status. Demographics help you know who your customers are and who to target market. For example, do you sell more to men or women? If women, your marketing dollars should be more directed to women.

QuickBooks reports can provide your company with timely, relevant, and reliable management, research and development, marketing and sales, production, finance, and customer service information. However, it can only provide that information if QuickBooks is properly set up and used. For example, QuickBooks reports can provide purchase history information by generating the Income by Customer Summary, Sales by Customer Summary, Sales by Customer Detail, Sales by Product/Service Summary, Sales by Customer Type Detail, and Sales by Product/Service Detail reports. These reports identify who your company’s best income and sales customers are.

QuickBooks is a database. A database is an organized collection of data that is stored and accessed. Take the time to organize and collect customer profile information that will help your company management, research and development, marketing and sales, production, finance, and customer service owners and employees.

Note: If you’re a new Accounting Analytics client, we set up your company’s QuickBooks account to organize and collect your customers’ profile information.

QuickBooks Customer Information

You set up and manage customer information on the Contact Information page. The page allows you to enter the following contact, geographic, bookkeeping, and demographic information:

Contact Information

• Company
• Title
• First Name
• Middle Name
• Last Name
• Suffix
• Display Name
• Email
• Phone
• Mobile
• Fax
• Other
• Website
• Sub-customer of parent customer

Geographic Information

• Billing and shipping address (Google map, street, City, State, Zip code, Country)

Bookkeeping Information

• Notes
• Tax information (Exemption details)
• Payment and billing (Preferred payment method, Preferred delivery method, Terms, Opening balance, and Opening balance date)
• Attachments

Demographic Information

• Customer type (Additional information tab)

Customer Type allows you to enter customer demographics your company wants to store, collect, and access. Customer types are used for grouping customers into different segments. However, you must set up and assign your customer types.

To set up and assign customer types:

1. From the left menu, select Sales, and Customers
2. From the Customers screen, select Customer types
3. Select New customer type
4. Enter a name for the customer type and select Save

To generate a customer type report:

1. From the left menu, select Reports
2. Scroll down to the Sales and Customers section

Choose one of the following reports:

1. Customer Contact List (select the Gear icon and check Customer Type under Change columns)
2. Sales by Customer Detail (select the Gear icon and check Customer Type under Change columns)
3. Sales by Customer Type Detail

Add a Customer

To add a customer:

1. Select Sales from the left menu, then select Customers
2. Select New Customer
3. The Customer information page opens
4. Complete the fields in the Customer Information window
5. Select Save

Note: As you scroll down, you can also enter additional information in the Addresses, Notes and attachments, Payments, and Additional info sections

Edit Customer Information

You may need to edit a customer's information. When you edit customer information, the changes are reflected in other areas of your company file including previously sent invoices. QuickBooks also updates any recurring templates that use the previous information such as:

• Billing address
• Shipping address
• Email
• Preferred payment method
• Terms
• Preferred delivery method

To edit customer information:

1. Select Sales from the left menu, then select Customers
2. Select the customer’s name from the list or search for the customer by name or details
3. Select Edit
4. Update customer information
5. Select Save

Inactivate a Customer

If you need to remove a customer so they don’t appear as an option when creating sales or receipts, you make them inactive. You can’t delete a customer.

To make a customer inactive:

1. Select Sales from the left menu, then select Customers
2. Search the customer by name and select Customer Details
3. Select Edit, then Make inactive
4. Select Yes to make the customer inactive

Merge Customers

If a customer has been created twice or has a duplicate profile by mistake, it’s usually best to just merge the two customers, as opposed to making one of the two inactive.

Note: The merging process is not reversible and can't be undone.

To merge customers:

1. Select Sales from the left menu, then Customers
2. Search for the customer you don’t want to use by name and select Customer Details
3. Select Edit
4. Change the Title fields (First name, Middle name, Last name, and Suffix) and the Display Name to make them identical to the customer you want to merge with
5. Select Save, then select Yes to confirm that you want to merge the two customers

Sales and Receipts Process

Frequency

Good cash management requires you to process your sales and receipts daily. Sales and receipts received over the weekend or holiday should be processed on the following Monday or business day. You can create sales and receipts one at a time throughout the day or all at once at the end of the day.

Processing Sales and Receipts

How you process sale and receipt transactions depends on your type of sales transactions, acceptable methods of payment, and technology.

Type of Sales Transactions

How you record sales transactions in QuickBooks depend on the type of sales transaction.

1. Advance payment sales: Sales Receipt and Refund Receipt
2. Cash sales (time of sale or completion of service): Sales Receipt and Refund Receipt
3. Sales on account: Invoice, Receive Payment, Credit Memo, and Refund Receipt

Acceptable Methods of Payment

Acceptable methods of payment may include cash, checks, credit cards, ACH bank transfers (eCheck), and online payment systems such as PayPal. There was a time when the majority of payments were made by cash or paper checks. However, today very few customers carry or pay for products or services with cash or paper checks. The main driving force for the change is online companies such as Amazon. As more customers transition from shopping at brick and mortar to online companies, customers transition from cash and paper checks to credit cards, debit cards, eCheck, and online payment systems.

In addition, many vendors such as restaurants no longer accept cash or paper checks. Although they receive more money for accepting cash or paper checks because there are no merchant fees, they don’t accept cash or paper checks primarily due to insufficient funds paper checks, and paper check processing inefficiencies. It is more efficient to process credit cards, debit cards, or eChecks compared to processing cash and paper checks. If you don’t accept cash or paper checks you may lose a few sales, but the loss is outweighed by the cost and inefficiencies of accepting them.

Sales and Receipts Technology

QuickBooks Online Payments is an accounting process automation tool used to process sales and receipts efficiently and productively with QuickBooks. QuickBooks Online Payments is seamlessly integrated with your QuickBooks account and enables you to receive payments sooner. Your Sales Receipts and Invoice payments can be processed with a credit card, debit card, or eCheck online, by mail, phone, and on-site.

To automate the invoice payment process, you can email invoices with an option for the customer to elect to pay the invoice by credit card, debit card, or eCheck online. When an online payment is made, QuickBooks automatically creates a Receive Payment, applies the payment to the customer’s account, and emails a payment confirmation that he or she can print.

Sales and Receipts Process

The sales and receipts process includes:

1. Record advance payment and cash sales
2. Create Sales Receipts
3. Record sales on account (credit sales)
4. Create Invoices
5. Create Receive Payments
6. Create Credit Memos
7. Record sales refunds
8. Create Refund Receipts
9. Record bank deposits
10. Create Bank Deposits
11. Monitor and collect unpaid Invoices
12. Email sales and receipts reports

Record Advance Payment and Cash Sales

Creating Sales Receipts includes:

1. Create a Sales Receipt
2. Make Recurring Sales Receipts
3. Edit a Sales Receipt
4. Void a Sales Receipt
5. Delete a Sales Receipt

Create a Sales Receipt

When you have an advance or cash sale you create a sales receipt. Cash receipts record the sale and the cash (currency, check, credit card, and eCheck) received.

To create a Sales Receipt:

1. Select New from the left menu, then Sales Receipt
2. The Sales Receipt page opens
3. Type the customer’s name and select the customer
4. To add a new customer, select Add New. Take the time now to set up customer information
5. (Optional) Add any applicable tags
6. Select the Payment method, enter the Reference no., and select Undeposited funds/Payments to deposit in the Deposit to account.
7. If the method is “QuickBooks Payment–Credit Card”, select Enter credit card details and enter the card information requested in the Credit Card Information window. Then, select Use this info
8. Select the Process Credit Card box to charge the payment upon completion
9. Select the Product/Service(s) and enter the quantity (QTY)
10. Delete, add, or clear all lines as necessary. To delete a line, select the trash can icon to the right. To add one line, select the line and the + icon to the left. To add 4 lines, select Add lines. To clear all lines, select Clear all lines
11. (Optional) Enter the Discount percent or value
12. Depending on your sales process you can create and send sales receipts one at a time throughout the day or all at once at the end of the day
13. Create and Send Sales Receipts One at a Time
14. Select Save and send to create and preview an email to send the sales receipt to your customer
15. All at Once at the End of the Day
16. Select Save and new to save your work and start a new Sales Receipt. Select Save and close on your last Sales Receipt
17. From the left menu, select Sales and All Sales
18. Select Filter, then Sales Receipts in the Type field, Today in the Date field, and Apply
19. Select the Batch all button to select all the day’s Sales Receipts
20. Select Batch actions and Send transactions

Behind the Scenes

When you create a Sales Receipt, QuickBooks increases (debits) the “Deposit to” Undeposited funds/Payments to deposit account (Balance Sheet: Asset) and increases (credits) the “Product/Service” account (Profit and Loss: Income) and Sales tax account (Balance Sheet: Liability) by the “Amount received”.

Example – A company sold an item for $100 with a sales tax rate of 6.5% at the time of purchase.

T Accounts:

Note: You can go to a previously created Sales Receipt transaction to view the Transaction journal.

To view the Transaction journal:

1. Select the Sales Receipt transaction you would like to view
2. Select More at the bottom of the transaction
3. Select Transaction journal

Make Recurring Sales Receipts

You can make a Recurring Sales Receipt for Sales Receipts that occur periodically or frequently.

For example, you may sell a product or service to a customer monthly for a fixed fee. By creating a Recurring Sales Receipt, you don’t have to create and send it each month. You can schedule it to be created and emailed automatically.

You may sell the same products or services frequently. By creating a Recurring Sales Receipt, you don’t have to create it every time you sell it.

You may also sell products or services that don’t occur periodically or frequently, but the accounts are numerous, and/or the descriptions are detailed, and it takes time to create them. By creating a Recurring Sales Receipt, you don’t have to take the time to recreate it every time you sell it.

To make a Recurring Sales Receipt:

1. Select the Gear icon on the toolbar, then select Recurring Transactions
2. On the Recurring Transactions page, select New
3. Select Sales Receipt from the Transactions Type dropdown list and select OK
4. The Recurring Sales Receipt page opens
5. Enter a Template name and choose a Type - Scheduled, Reminder, or Unscheduled

Scheduled

1. What it does: Creates sales receipts according to a schedule you set. If you schedule them to be sent “Automatically send emails” they will be emailed automatically
2. This type is useful for sales receipts with a fixed schedule and amounts

Reminder

1. What it does: Propose a series of sales receipts according to the schedules you set. The sales receipts are not sent until you decide to create and send them. These reminders are found in the Tasks section at the top of the Dashboard page. The Tasks section only appears when you have tasks. The reminders can also be found on the Reminder List
2. How you control it: By selecting on each sales receipt you’ll be able to decide which ones to create, and you can review and edit them first before scheduling them
3. This type is useful for sales receipts with a fixed schedule that need to be edited before they’re created

Unscheduled

1. What it does: It is saved with partial or complete data and without a schedule. Nothing happens to this type of sales receipt until you choose to use it
2. How you control it: Unscheduled transactions don’t have timetables; you use them as needed from the Recurring Transactions list. You select the sales receipt and select Use to use it as the starting point for a new sales receipt
3. This type is useful for transactions that contain a lot of detail that you don’t want to retype, but that isn't needed on any set schedule such as complicated sales receipts that need to go to different customers‍. Do not use Create days in advance with QuickBooks Online Payments. If you enter a number in the Create days in advance, the sales receipt will be created and charged on an advanced day.
4. Select the name of the customer from the dropdown list or type the first letter(s) to retrieve the customer and verify the Email and Cc and Bcc emails
5. Select Add new if the customer is not set up. Take the time now to set up customer information
6. Under Options, check Automatically send emails
7. Select the interval for the recurring sales receipt
8. This dictates when and how often the sales receipt will be created, charged, and emailed‍
9. (Optional) Select a Start date and End (None, By, or After) to start and end the recurring sales receipt
10. Verify and enter the Billing address, Shipping to address, Ship via, Shipping date, and Tracking no., if any‍
11. (Optional) Enter any applicable tags
12. Select the Credit Card Payment method, then verify the credit card information
13. The Service Date is taken from the Start date
14. Select or add the Product/Service(s) purchased from the dropdown list, change, enter or select the Description, quantity (QTY), Rate, Amount, Tax (taxable?), and Discount, if any
15. Select Add new if the product or service is currently not set up
16. Delete, add or clear all lines as necessary. To delete a line, select the trash can icon to the right of the line. To add one line, select the line and the + icon. To add 4 lines, select Add lines. To clear all lines, select Clear all lines‍. All fields must be entered for Scheduled templates. For example, if an item has a rate of $0, enter 0. If left blank, the line will not save
17. It is not necessary to fill in every field for Reminder or Unscheduled templates. Enter just the data to be repeated in each occurrence. You'll be able to edit each occurrence before it’s actually created
18. Select Save template

Note: You can make a recurring Sales Receipt template from any existing Sales Receipt. To make a recurring Sales Receipt template from an existing Sales Receipt, open an existing Sales Receipt and select Make Recurring at the bottom of the page.

Edit a Sales Receipt

To edit a Sales Receipt:

1. Select the Search icon, then Advanced Search
2. Select Sales Receipts from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the sales receipt transaction matches and select the sales receipt to edit
5. Edit the transaction
6. Select Save and close

Void a Sales Receipt

To void a Sales Receipt:

1. Select the Search icon, then Advanced Search
2. Select Sales Receipts from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the sales receipt transaction matches and select the sales receipt to void
5. Select More, then Void
6. Select Yes to confirm that you want to void the transaction
7. Select Save and close

Delete a Sales Receipt

Note: It is a good practice not to delete, but void transactions.

To delete a Sales Receipt:

1. Select the Search icon, then Advanced Search
2. Select Sales Receipts from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the sales receipt transaction matches and select the sales receipt to delete
5. Select More, then Delete
6. Select Yes to confirm that you want to delete the transaction
7. Select Save and close

Once you delete a sales receipt, only the Audit log maintains a record of it. To open the Audit log, from the left menu, select Reports and enter Audit log in the search bar.

Create a Payment Link

QuickBooks allows you to create Payment Links. Payment Links are custom links or QR codes you can share with the customer, which they can open to easily pay for products or services. This feature is included with your QuickBooks Online Payments subscription. When a customer pays through a Payment Link, QuickBooks automatically creates a Sales Receipt.

This feature is typically used in face-to-face interactions with a customer as a quick way for them to pay. For example, a contractor may complete a service and use their mobile device to quickly enter a customer and the total amount, then have the customer scan the QR code with their mobile device and pay right away. This option should not be used in place of an invoice. To properly track Accounts Receivable, an invoice should be used for customers that you don’t expect to pay right away.

To create a payment link:

1. Select Sales from the left menu, then select the Payment Links tab
2. If this is your first time creating a payment link, select Create my link
3. If you have already set up payment links, select new Payment Link
4. If this is your first time creating a payment link, select Customize  URL to edit the URL
5. Then enter your custom text (ex. company name) in the field provided and select Save and finish
6. Enter the payment amount
7. Enter product or service details for the customer to see
8. Select or enter the Customer name
9. Enter or edit the Customer email
10. Select the methods of payment you want to provide the customer
11. Select Send payment link
12. The next screen will say that the link was emailed to the customer. From here, you can select Copy to copy the link. This is useful if you want to send the link to a customer via text message
13. You can also select QR Code to access the QR code generated by QuickBooks. This is useful if you want to allow the customer to scan the code directly from your phone and be taken to the payment link
14. When finished, select Done

Edit an Automatic Sales Receipt

Once the customer has paid using the payment link, you’ll need to edit the sales receipt automatically created by QuickBooks. Because the only details included in the payment link are the customer and the total amount, you’ll need to add any other necessary details by editing the sales receipt.

To edit an Automatic Sales Receipt:

1. Select the Search icon, then Advanced Search
2. Select Sales Receipts from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the sales receipt transaction matches and select the sales receipt to edit
5. Add necessary details to the Sales Receipt (Tags, Product/Service details, Attachments, etc.)
6. Select Save and close

View Payment Link

You can see the details and status of a payment link from the Payment Links page.

To view a payment link:

1. Select Sales from the left menu, then select the Payment Links tab
2. Select the Payment link from the list
3. Resend the email to the customer, copy the link, view the QR code, or review the details of the link‍
4. Select Done

Note: The status is displayed at the top of the pane

Edit Payment Link

To edit a Payment Link:

1. Select Sales from the left menu, then select the Payment Links tab
2. Select the dropdown arrow from the Action column, then select Edit
3. Make any necessary changes, then select Send payment link to have the link resent to the customer

Delete Payment Link

To delete a Payment Link:

1. Select Sales from the left menu, then select the Payment Links tab
2. Select the dropdown arrow from the Action column, then select Delete
3. When asked to confirm, select Delete

Record Sales on Account (Credit Sales)

Creating invoices includes:

1. Create an Invoice
2. Make Recurring Invoices
3. Edit an Invoice
4. Void an Invoice
5. Delete an Invoice

Create an Invoice

When you have a sale on account you create an Invoice. Invoices record the sale and track accounts receivable or the amount of money your customer owes you. When the customer receives an Invoice, they will have the option to pay immediately or schedule a time for the payment to occur.

To create an Invoice:

1. Select New from the left menu, then select Invoice
2. The Invoice page opens
3. Type the customer’s name and select the customer.To add a new customer, select Add new. Take the time now to set up customer information
4. Verify the Online payments options (Cards and Bank transfer with QuickBooks OnlinePayments)
5. Verify the Billing address
6. Select the Terms for the Invoice from the dropdown list
7. The terms indicate when you expect payment for the Invoice
8. Verify the Invoice date and the Due date. If you perform services and turned on the Service date, enter the Service Date
9. The default due date changes depending on the terms previously selected
10. (Optional) Enter any applicable tags
11. Select the Product/Service(s) and enter the quantity (QTY)
12. Delete, add, or clear all lines as necessary. To delete a line, select the trash can icon to the right. To add one line, select the line and the + icon to the left. To add 4 lines, select Add lines. To clear all lines, select Clear all lines
13. Depending on your sales process you can create and send Invoices one at a time throughout the day or all at once at the end of the day
14. Create and Send Invoices One at a Time
15. Select Save and send to create and preview an email to send the invoice to your customer
16. All at Once at the End of the Day
17. Select Save and new to save your work and start a new Invoice. Select Save and close on your last Invoice
18. From the left menu, select Sales and All Sales
19. Select Filter, then Invoices in the Type field, Today in the Date field, and Apply
20. Select the Batch all button to select all the day’s Invoices
21. Select Batch actions and Send transactions

Behind the Scenes

When you create an Invoice, QuickBooks increases (debits) the Accounts Receivable (A/R) account (Balance Sheet: Asset) and increases (credits) the “Product/Service” account (Profit and Loss: Income) and Sales tax account (Balance Sheet: Liability), if taxable, by the “Balance due” amount.

Example – A company sold an item for $100 with a sales tax rate of 6.5% on account.

T Accounts:

Note: you can go to a previously created Invoice transaction to view the Transaction Journal.

To view the Transaction journal:

1. Select the Invoice transaction you would like to view
2. Select More at the bottom of the transaction
3. Select Transaction journal

Make Recurring Invoices

You can make a Recurring Invoice for Invoices that occur periodically or frequently.

For example, you may sell a product or service on account to a customer monthly for a fixed fee. By creating a Recurring Invoice, you don’t have to create and send it each month. You can schedule it to be created and emailed automatically. In this case, the customer will have the option to turn on Autopay, which allows QuickBooks to retain their payment information and charge their account for the invoice automatically on a recurring basis.

You may sell certain products or services on account frequently. By creating a Recurring Invoice, you don’t have to create it every time you sell it.

You may also sell products or services that don’t occur periodically or frequently, but the accounts are numerous, and/or the descriptions are detailed, and it takes time to create it. By creating a Recurring Invoice, you don’t have to take the time to recreate it every time you sell it.

To make a Recurring Invoice:

1. Select the Gear icon on the toolbar, then select Recurring Transactions
2. On the Recurring Transactions page, select New
3. Select Invoice from the Transactions Type dropdown list and select OK
4. The Recurring Invoice page opens
5. Enter a Template name and choose a Type — Scheduled, reminder, or unscheduled

Scheduled

1. What it does: Creates Invoices according to a schedule you set. If you schedule them to be sent “Automatically send emails” they will be emailed automatically
2. This type is useful for invoices with a fixed schedule and amounts

Reminder

1. What it does: Proposes a series of Invoices according to the schedules you set. The Invoices are not sent until you decide to create and send them. These reminders are found in the Tasks section at the top of the Dashboard page. The Tasks section only appears when you have tasks. The reminders can also be found on the Reminder List
2. How you control it: By selecting on each Invoice you’ll be able to decide which ones to create, and you can review and edit them first before scheduling them
3. This type is useful for invoices with a fixed schedule that need to be edited before they’re created

Unscheduled

1. What it does: It is saved with partial or complete data and without a schedule. Nothing happens to this type of Invoice until you choose to use it
2. How you control it: Unscheduled transactions don’t have timetables; you use them as needed from the Recurring Transactions list. You select the Invoice and select Use to use it as the starting point for a new Invoice
3. This type is useful for transactions that contain a lot of detail that you don’t want to retype, but that isn't needed on any set schedule such as complicated Invoices that need to go to different customers. Do not use Create days in advance with QuickBooks Online Payments. If you enter a number in the Create days in advance, the Invoice will be created and charged on an advanced day.
4. Select the name of the customer from the dropdown list or type the first letter(s) to retrieve the customer, then verify the Email and Cc and Bcc emails
5. Select Add new if the customer is not set up. Take the time now to set up customer information
6. Under Options, check Automatically send emails
7. Select the interval for the recurring sales receipt
8. This dictates when and how often the sales receipt will be created, charged, and emailed
9. (Optional) Select a Start date and End (None, By, or After) to start and end the recurring sales receipt
10. Verify and enter the Billing address, Shipping to address, Ship via, Shipping date, and Tracking no., if any
11. (Optional) Enter any applicable tags
12. Select the Credit Card Payment method, then verify the credit card information
13. The Service Date is taken from the Start date
14. Select or add the Product/Service(s) purchased from the dropdown list, and change, enter or select the Description, quantity (QTY), Rate, Amount, Tax (taxable?), and Discount, if any
15. Select Add new if the product or service is currently not set up
16. Delete, add or clear all lines as necessary. To delete a line, select the trash can icon to the right of the line. To add one line, select the line and the + icon. To add 4 lines, select Add lines. To clear all lines, select Clear all lines. All fields must be entered for Scheduled templates. For example, if an item has a rate of $0, enter 0. If left blank, the line will not save
17. It is not necessary to fill in every field for Reminder or Unscheduled templates. Enter just the data to be repeated in each occurrence. You'll be able to edit each occurrence before it’s actually created
18. Select Save template

Note: You can make a recurring Sales Receipt template from any existing Sales Receipt. To make a recurring Sales Receipt template from an existing Sales Receipt, open an existing Sales Receipt and select Make Recurring at the bottom of the page.

Edit an Invoice

To edit a Sales Receipt:

1. Select the Search icon, then Advanced Search
2. Select Sales Receipts from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the sales receipt transaction matches and select the sales receipt to edit
5. Edit the transaction
6. Select Save and close

Void an Invoice

To void a Sales Receipt:

1. Select the Search icon, then Advanced Search
2. Select Sales Receipts from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the sales receipt transaction matches and select the sales receipt to void
5. Select More, then Void
6. Select Yes to confirm that you want to void the transaction
7. Select Save and close

Delete an Invoice

Note: It is a good practice not to delete, but void transactions.

To delete an Invoice:

1. Select the Search icon, then Advanced Search
2. Select Invoices from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the Invoice transaction matches and select the Invoice to delete
5. Select More, then Delete
6. Select Yes to confirm that you want to delete the transaction

Once you delete an Invoice, only the Audit log maintains a record of it. To open the Audit log, from the left menu, select Reports and enter Audit log in the search bar.

Creating Late Fees or Finance and Service Charges on Invoices

The sample Accounts Receivable Collection Policy directs you to add late fees or finance charges to overdue Invoices.

Note: Some states don’t permit certain businesses to charge finance charges. Check with your state when setting up your Accounts Receivable Collection Policy for late fees or finance charges.

QuickBooks automatically calculates late fees and adds them to overdue Invoices as a line belowProduct/Service. See Late Fees in Chapter 3: Setting Up Your Company.

The default settings apply to all customer Invoices; however, you can also customize these fees for individual customers.

To create a custom late fee for an individual customer:

1. Select Sales from the left menu, then Customers
2. Choose the customer you would like to customize
3. Select the Late Fees tab. You have two ways to customize:
4. Waive late fees – Disabling late fees prevents QuickBooks Online from ever calculating and applying late fees on an overdue Invoice for this customer
5. Override the default late fee settings – Selecting Customize creates a new set of rules that apply only to the customer. You can have different late fee rules for different customers
6. Customize as desired, then select Save

Create Receive Payments

With QuickBooks Online Payments the invoiced customer has the option to pay online with a credit card, debit card, or ACH bank transfer (eCheck), thus automating the payment process. When an online payment is made, the payment is automatically created as a payment on the customer’s accounts receivable account. The customer is automatically emailed a Payment and sent a confirmation that he or she can print.

You may have some customers who choose to pay the Invoice outside of QuickBooks Online Payments (offline). If so, the customer can print and mail the Invoice with the check or call with credit card information. When you receive the check or credit card information, you create a Receive Payment.

To create a Receive Payment (payment of an invoice):

1. Select New from the left menu, then select Receive Payment
2. The Receive Payment page opens
3. Type the customer’s name and select the customer
4. You can also select the customer by selecting Find by invoice no
5. Verify the Payment date
6. Select the Payment method, enter the Reference no. (check number), and select Undeposited funds/Payments to deposit in the Deposit to account
7. On the Outstanding Transactions table, select the checkbox next to the invoices that you’re collecting payment for and enter the Payment in the applicable field
8. Select Save and close if entering one payment or Save and new if multiple payments

Note: To link a payment to an invoice, always use Receive payment for invoice payments. If you deposit a payment from the Bank Deposit screen instead of Receive payment on the invoice, the payment will not be linked to the invoice and the invoice will appear as unpaid on your reports.

Behind the Scenes

When you create a Receive Payment, QuickBooks increases (debits) the “Deposit to account” (Balance Sheet: Asset) and decreases (credits) the Accounts Receivable (A/R) account (Balance Sheet: Asset) by the “Amount received”.

Example – A company sold an item for $100 with a sales tax rate of 6.5% on account. The customer paid the invoice.

T Accounts:

In our example, the Sales tax account will be decreased when the liability is paid from the operating cash account.

Sales tax account (Balance Sheet: Liability) decreased (debited). Cash operating account (Balance Sheet: Asset) decreased (credited).

Note: You can go to a previously created Invoice transaction to view the Transaction journal.

To view the Transaction journal:

1. Select the Invoice transaction you would like to view
2. Select More at the bottom of the transaction
3. Select Transaction journal

Create Credit Memos

As the seller, you issue a customer credit on purchases on accounts that haven’t been paid.

A credit memo is an abbreviated form of the term "credit memorandum," which is issued by a seller to a credit customer. The credit decreases the customer’s account by the credit amount. The memo should explain the reason for the credit and specify the invoice that initiated the credit. An analysis of credit memos over a period of time helps identify deficiencies in the seller’s sales process.

In QuickBooks, a credit memo decreases the customer’s account and not a specific invoice. If you have a customer with one unpaid invoice, the credit’s applied to that unpaid invoice. If you have a customer with multiple unpaid invoices, the credit’s applied to the oldest unpaid invoice.

If a customer overpays, the payment transaction automatically creates an additional credit in the customer’s credit balance. While this is not a credit memo, you can apply the overpayment as a credit to their next transaction or you can give them a refund.

Creating credit memos includes:

1. Create a Credit Memo
2. Make Recurring Credit Memo
3. Edit a Credit Memo
4. Void a Credit Memo
5. Delete a Credit Memo

Create a Credit Memo

To create a Credit Memo:

1. Select New from the left menu, then select Credit Memo
2. The Credit Memo page opens
3. Type the customer’s name, select the customer, and verify the Email and Cc and Bcc emails
4. Verify the Billing address and Credit Memo Date. If you perform services and turned on the Service date, enter the Service Date
5. (Optional) Enter any applicable tags
6. Select the Product/Service(s) and enter the quantity (QTY)
7. Delete, add or clear all lines as necessary. To delete a line, select the trash can icon to the right of the line. To add one line, select the line and the + icon. To add 4 lines, select Add lines. To clear all lines, select Clear all lines
8. Select Save and send to create and preview an email to send the credit memo to your customer or Save and share link to create a link to the credit memo you can email or text to your customer. Alternatively, you can select Save and new to save your work and start a new credit memo or Save and close to save the credit memo and close the screen. You can select Save at any time to save your work without leaving the credit memo
9. If Save and new, select Save and close on the last credit memo
10. On the All Sales page, select the Type column up arrow to group the credit memos, select the credit memos you created and on the Batch actions dropdown menu, select Send transactions
11. Once you save or preview the invoice, even if you don’t send or print it, the transaction information from the invoice you created is included in reports and in the customer balance

Behind the Scenes

When you create a Credit Memo, QuickBooks decreases (debits) the “Product/Service” account(s) (Profit and Loss: Income) and decreases (credits) the Accounts Receivable (A/R) account (Balance Sheet: Asset) by the “Total Credit”.

Example – Company created a $106.50 credit memo for a return of a $100 item with a sales tax rate of 6.5% purchased on account. The invoice has not been paid.

T Accounts:

Note: You can go to a previously created Credit Memo transaction to view the Transaction journal.

To view the Transaction journal:

1. Select the Credit Memo transaction you would like to view
2. Select More at the bottom of the transaction
3. Select Transaction journal

Make Recurring Credit Memos

You can make a Recurring Credit Memo for credit memos that occur periodically. For example, you may issue a common credit memo to customers such as a product return. By creating a Recurring Credit Memo, you don’t have to create and send it each time a credit memo occurs.

To make a Recurring Credit Memo:

1. Select the Gear icon on the toolbar, then select Recurring Transactions
2. On the Recurring Transactions page, select New
3. Select Credit Memo from the Transactions Type dropdown list and select OK
4. The Recurring Credit Memo page opens
5. Enter a Template name and choose the Type Unscheduled. Due to the nature of credit memos, you would generally create a recurring unscheduled credit memo

Unscheduled

1. What it does: It is saved with partial or complete data and without a schedule. Nothing happens to this type of credit memo until you choose to use it
2. How you control it: Unscheduled transactions don’t have timetables; you use them as needed from the Recurring Transactions list. You select the credit memo and select Use to use it as the starting point for a new credit memo
3. This type is useful for transactions that contain detail that you don’t want to retype, but that isn't needed on any set schedule such as credit memos that need to go to different customers
4. Select the name of the customer from the dropdown list or type the first letter(s) to retrieve the customer, then verify the Email and Cc and Bcc emails
5. Select Add new if the customer is not set up. Take the time now to set up customer information
6. Verify the Billing address
7. (Optional) Enter any applicable tags
8. Select or add the Product/Service(s) purchased from the dropdown list, change, enter or select the Description, quantity (QTY), Rate, Amount, Tax (taxable?), and Discount, if any
9. Select Add new if the product or service is currently not set up
10. Delete, add or clear all lines as necessary. To delete a line, select the trash can icon to the right of the line. To add one line, select the line and the + icon. To add 4 lines, select Add lines. To clear all lines, select Clear all lines
11. It is not necessary to fill in every field for Unscheduled templates. Enter just the data to be repeated in each occurrence. You'll be able to edit each occurrence before it’s actually created
12. Select Save template

Note: You can make a Recurring Credit Memo template from any existing Credit Memo. To make a Recurring Credit Memo template from an existing Credit Memo, open an existing Credit Memo and select Make Recurring at the bottom of the page.

Edit a Credit Memo

To edit a Credit Memo:

1. Select the Search icon, then Advanced Search
2. Select Credit Memos from the All Transactions dropdown menu
3. Enter the payee in the Enter Payee field and select Search
4. Scan the credit memo transaction matches and select the transaction to edit
5. Edit the transaction
6. Select Save and close

Void a Credit Memo

To void a Credit Memo:

1. Select the Search icon, then Advanced Search
2. Select Credit Memo from the All Transactions dropdown menu
3. Enter the Customer in the Enter Customers field and select Search
4. Scan the Credit Memo transaction matches and select the Credit Memo to void
5. Select More, then Void
6. Select Yes to confirm that you want to void the transaction
7. Select Save and close

Delete a Credit Memo

Note: It is a good practice not to delete, but void transactions.

To delete a credit memo:

1. Select the Search icon, then Advanced Search
2. Select Credit Memos from the All Transactions dropdown menu
3. Enter the customer in the Enter Customer field and select Search
4. Scan the credit memo matches and select the desired transaction to delete
5. In the Credit Memo window, select More at the bottom of the window and then select Delete
6. Select Yes to confirm that you want to delete the transaction
7. Once you delete a credit memo, only the Audit log maintains a record of it. To open the Audit log, from the left menu, select Reports and enter Audit log in the search bar

Record Sales Refunds

You issue a refund on advanced payment purchases, cash purchases, and purchases on accounts that have been paid. The type of refund depends on the type of payment you received. If your customer paid with a check, the refund should be issued with a check. If your customer paid with a credit card, the refund should be issued with a credit to the credit card they used.

A refund is money returned from a vendor to a customer generally due to the return of a product. The refund receipt should explain the reason for the refund and specify the sales receipt that initiated the refund. An analysis of refunds over a period of time can help identify deficiencies in the vendor’s sales process and lead to sales process improvement.

If the customer paid with a check and you’re issuing a refund with a check, the check category is a refund account and therefore you don’t need to create a Refund Receipt. The check records the refund.

To issue a refund with a check, see Create Checks in Chapter 6: Processing Purchases and Payments.

If your customer paid with a credit card and you’re issuing a refund to the credit card, the refund is processed through your QuickBooks Online Payments or merchant account. However, the refund needs to be recorded in QuickBooks, therefore you create a Refund Receipt.

Note: In QuickBooks, a Refund Receipt identifies the customer refunded, but not the specific sales receipt.

Creating Refund Receipts includes:

1. Create a Refund Receipt
2. Make Recurring Refund Receipt
3. Edit a Refund Receipt
4. Void a Refund Receipt
5. Delete a Refund Receipt

Create a Refund Receipt (Credit Card Payment)

To create a credit card Refund Receipt for an item paid with a credit card.

1. Select New from the left menu, then select Refund Receipt
2. The Refund Receipt page opens
3. Type the customer’s name, select the customer, and verify the Email and Cc and Bcc emails
4. Verify the Billing address and Refund Receipt date‍
5. (Optional) Enter any applicable tags
6. Select the Credit Card Payment method and enter the Service Date (if you perform services and turned on the Service date). The Refund From field closes and a new Enter credit card details box opens
7. Select Enter credit card details, enter the Credit Card Information, and select save
8. Select the Product/Service(s) and enter the quantity (QTY)
9. Delete, add or clear all lines as necessary. To delete a line, select the trash can icon to the right of the line. To add one line, select the line and the + icon. To add 4 lines, select Add lines. To clear all lines, select Clear all lines
10. Select Save and send to create and preview an email to send the refund receipt to your customer. Alternatively, you can select Save and new to save your work and start a new refund receipt or Save and close to save the refund receipt and close the screen. You can select Save at any time to save your work without leaving the refund receipt
11. If Save and new, select Save and close on the last refund receipt

On the All Sales page, select the Type column up arrow to group the refund receipts, select the refund receipt you created and on the Batch actions dropdown menu, select Send transactions.

Once you save or preview the refund receipt, even if you don’t send or print it, the transaction information from the refund you created is included in the reports.

Behind the Scenes

When you create a Refund Receipt, QuickBooks decreases (debits) the “Product/Service” account(s) (Profit and Loss: Income) and decreases (credits) the credit card bank account (Balance Sheet: Asset) by the “Total Amount Refunded”.

Example – Company created a $106.50 refund receipt for a return of a $100 item with a sales tax rate of 6.5% paid with a check.

T Accounts:

Note: You can go to a previously created Refund Receipt transaction to view the Transaction Journal.

To view the Transaction journal:

1. Select the Refund transaction you would like to view
2. Select More at the bottom of the transaction
3. Select Transaction journal

Make Recurring Refund Receipts

You can make a Recurring Refund Receipt for refund receipts that occur periodically. For example, you may issue a common refund receipt to customers such as a product return. By creating a Recurring Refund Receipt, you don’t have to create and send it each time it occurs.

To make a Recurring Refund Receipt:

1. Select the Gear icon on the toolbar, then select Recurring Transactions
2. On the Recurring Transactions page, select New
3. Select Refund from the Transactions Type dropdown list and select OK
4. The Recurring Refund page opens
5. Enter a Template name and choose the Type Unscheduled. Due to the nature of refund receipts, you would generally create a recurring unscheduled Refund Receipt

Unscheduled

1. What it does: It is saved with partial or complete data and without a schedule. Nothing happens to this type of refund receipt until you choose to use it
2. How you control it: Unscheduled transactions don’t have timetables; you use them as needed from the Recurring Transactions list. You select the refund receipt and select Use to use it as the starting point for a new refund receipt
3. This type is useful for transactions that contain detail that you don’t want to retype, but that isn't needed on any set schedule such as credit memos that need to go to different customers
4. Type the customer’s name, select the customer, and verify the Email and Cc and Bcc emails
5. Select Add New if the customer is not set up. Take the time to set up customer information
6. Verify the Billing address
7. (Optional) Enter any applicable tags
8. Select the payment method originally used by the customer and select the refund account from the dropdown menus
9. Select the Product/Service(s) and enter the quantity (QTY). Select Add new if the product or service is currently not set up
10. Delete, add or clear all lines as necessary. To delete a line, select the trash can icon to the right of the line. To add one line, select the line and the + icon. To add 4 lines, select Add lines. To clear all lines, select Clear all lines. All fields must be entered for Scheduled templates. For example, if an item has a rate of $0, enter 0. If left blank, the line will not save
11. It is not necessary to fill in every field for Reminder or Unscheduled templates. Enter just the data to be repeated in each occurrence. You'll be able to edit each occurrence before it’s actually created
12. Select Save template

Note: You can make a Recurring Refund Receipt template from any existing refund. To make a recurring refund template from an existing refund, open an existing refund, and select Make Recurring at the bottom of the refund.

Edit a Refund Receipt

To edit a Refund Receipt:

1. Select the Search icon, then Advanced Search
2. Select Refunds from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the refund transaction matches and select the refund to edit
5. Edit the transaction
6. Select Save and close

Void a Refund Receipt

To void a Refund Receipt:

1. Select the Search icon, then Advanced Search
2. Select Refunds from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the refund transaction matches and select the refund to void
5. Select More, then Void
6. Select Save and close

Delete a Refund Receipt

Note: It is a good practice not to delete, but void transactions.

To delete a Refund Receipt:

1. Select the Search icon, then Advanced Search
2. Select Refunds from the All Transactions dropdown menu
3. Enter the customer in the Enter Customers field and select Search
4. Scan the refund transaction matches and select the refund to delete
5. In the Refund window, select More at the bottom of the window and then select Delete
6. Select Yes to confirm that you want to delete the transaction. Once you delete a refund, only the Audit log maintains a record of it. To open the Audit log, from the left menu, select Reports and enter Audit log in the search bar

Record Bank Deposits

At the end of each business day, the bookkeeper should create a Bank Deposit. See Bank Deposits and Transfers in Chapter 4: Processing Bank and Credit Card Accounts.

Monitor and Collect Unpaid Invoices

Accounts Receivable Collection Policies and Procedures

An accounts receivable collection policy should identify what methods credit personnel will use to collect receivables, particularly past-due accounts. The best collection process is one that is proactive and consistent and reflects the sales cash management rule Receive payment as soon as possible.

The accounts receivable collection policy should include:

• When to contact a customer
• How to contact a customer
• When to place an account on hold
• How to resolve disputes, deductions, etc.
• When to turn over delinquent accounts to an outside collection agency or attorney
• When to write off an account to bad debt
• Authorizing settlements

Points to Consider:

• Has the company established a clearly defined process for collecting past-due accounts, beginning when an account first becomes delinquent and continuing until the debt is collected or when the collection cost exceeds the benefit?
• Does the company use multiple collection strategies such as email, telephone, and letter?
• Does the collection policy contain a statement that reinforces ethical behavior and credit professionalism when communicating with customers and salespeople?
• Is there a policy for when to place an account on credit hold and does it have the buy-in of sales?
• Are customers, customer service, shipping, and salespeople notified immediately, as applicable, of a potential credit hold situation before the hold actually goes into effect?

Small companies often don’t have the abundant source of capital or funding that large public companies do and, as such, the risks associated with slow-paying customers are detrimental. Therefore, small companies need to guard accounts receivable closely to optimize cash flow.

Collection Responsibility

Depending on the size or organization of the company, the collection function should be assigned to a specific employee. The employee will be working under the direction of the owner of the company, the CFO, the controller, the accountant, or the bookkeeper

Sample Collection Policies and Procedures

Employee Responsible

The bookkeeper is responsible for the accounts receivable collection process.

Payment Terms

The company’s terms are 30 days (Net 30) from the receipt of the invoice.

Late Fees

The company assesses a finance charge of 1.5% per month or 18% per year on all amounts received after 30 days of the receipt of the invoice.

Late Fee Customer Communication

All invoices must contain the following message:

“Thank you for your business. Please send payment within 30 days of receipt of this invoice. We assess a finance charge of 1.5% per month or 18% per year on all amounts received after that time. If you have a question or need assistance, please contact us.”

When and How Invoices are Sent

Invoices are emailed on the day of completion of service.

When and How to Contact a Customer

First Contact

Each day the bookkeeper reviews the Invoices Unpaid list (select the Invoices, Unpaid window on the Dashboard page), scans the Status column for invoices Due in 7 days, and emails a reminder invoice with the following message:

“This invoice is to remind you that your invoice is due in 7 days. If you have made your payment, thank you. If we don’t receive your payment by the due date, we will assess you a finance charge of 1.5% per month or 18% per year on all amounts received after that time. Please ensure that we receive your payment by the due date to avoid the charge. If you have a question or need assistance, please contact us. We value your business and look forward to working with you.”

Note: The QuickBooks Invoices Unpaid list Status column also indicates if the invoice was Sent, Viewed, Paid, and Deposited. Thus, the bookkeeper knows if the invoice was viewed.

Second Contact

The bookkeeper also scans the Status column for invoices Overdue 1 day and emails an overdue invoice with the 30-day 1.5% finance charge added and the following message:

“This invoice is overdue, therefore the amount you owe includes a finance charge of 1.5% per month or 18% per year in addition to the past due amount. If you contact us within 7 days and pay the past due amount, we will waive the finance charge. If you have a question or need assistance, please contact us. We value your business and look forward to working with you.”

Third Contact

The bookkeeper also scans the Status column for invoices Overdue 38 days and calls the customer. The bookkeeper communicates the following:

1. Hi [name]
2. This is [name] with [company]
3. Invoice number [#] was emailed on [date] for [amount] and is now overdue
4. I’m calling to ask when we will receive payment (Let the customer provide a day or date)
5. If we receive payment by that day or date (or within 7 days if the message is left on voicemail), we will be happy to waive the finance charge
6. Thank you for your time and have a great day. We appreciate your business

The bookkeeper should be kind, friendly, and courteous.

If the bookkeeper receives a voicemail, record the message.

Fourth Contact

The bookkeeper also scans the Status column for invoices Overdue 45 days and calls the customer. The bookkeeper communicates the following:

1. Hi [name]
2. This is [name] with [company]
3. Invoice number [#] was emailed on [date] for [amount] and is now overdue
4. We called you last week and you stated you would pay the invoice by [day or date] and we still haven’t received payment
5. We are calling to let you know that if we don’t receive payment or hear from you to make an installment payment arrangement within 7 days, we will turn your invoice over to our attorney for collection
6. We understand you may be having financial difficulties and we’d be happy to work with you
7. We look forward to receiving your payment or hearing from you
8. Thank you for your time and have a great day. We appreciate your business

The bookkeeper should be kind, friendly, and courteous.

If the bookkeeper receives a voicemail, record the message.

When to Place an Account on Hold

The company no longer works with the client and places the account on hold.

The hold is immediately communicated to salespeople and customer service.

Fifth Contact

How to Resolve Disputes, Deductions, etc.,

The bookkeeper also scans the Status column for invoices Overdue 52 days and contacts his attorney. The company should have an attorney on retainer. The attorney has a collection letter template stating that his client will accept 50% of the original invoice as settlement of the total amount due and save the customer from harming his/her credit and avoiding small claims court and legal fees.

If payment is not received or arranged, the attorney reports the customer to the credit bureaus and takes the customer to small claims court.

When to Write off an Account to Bad Debt

The bookkeeper writes off the amount not collected to bad debt.

Email Sales and Receipts Reports

Daily, weekly, monthly, quarterly, and annual sales and receipts reports should be emailed to personnel who use sales and receipts report information. See QuickBooks Report Email Schedule Chapter 7: Communicating Business Performance.