Record customer payments in QuickBooks

One of the most common problems I see in QuickBooks is that people do not record customer payments and bank deposits correctly. This matters because incorrect entries here will make bank reconciliations harder. Deposits in the QuickBooks check register need to match how they appear on the bank statement.

Let’s say it time for you to go to the bank to deposit several customer payments. Normally, you would use only one paper deposit slip for the entire group of checks. You wouldn’t use one deposit slip per check. This is an important distinction, because the bank statement will show the deposit according to how it looks on the the deposit slip. And this Total must match how the deposit looks in your QuickBooks check register.

I’ll show you two ways to do this, one using Invoices, and the other using Sales Receipts.

Record Customer Payments When Invoices Were First Used to Record the Sale

I’m going to assume a few things here:

1. I assume that you used an Invoice to first record the sale for the customer. This matters because if an invoice was not first created, using the Customer Payments window to record a customer payment will create something called a “negative accounts receivable” for that customer. If you have not yet recorded the sale, either do it now by using an Invoice and coming back to these instructions, or use a Sales Receipt for this transaction (see below).

2. I assume that your Items on the Invoice were set up correctly, pointing to Revenue (or Sales) accounts in the Chart of Accounts.

3. I assume that your Preference is turned on to use Undeposited Funds as the Deposit To account. If you are unsure, follow this path:

Edit > Preferences > Sales & customers > Company Preferences tab > in the Receive Payments area, check the box that says, “Use Undeposited Funds as a default deposit to account.”

We will now record the customer’s payment by applying it to the invoice:

  • Open QuickBooks. From the Customers menu, select Receive Payments. The Customer Payment window opens.
  • In the Received From box, select the appropriate customer. Fill in the rest of the information on this screen. Don’t forget to include the check number, if paying by check, and the payment type.
  • If QuickBooks does not automatically select the appropriate invoice, select it yourself. Your customer may have included this information on the check or check stub. If necessary, apply credits by clicking the Discounts & Credits button.
  • Click the Save button. Repeat for all customer checks you received.
  • When finished, scroll down to the area below that says, “Record Bank Deposits of Customer Payments.”

Record Customer Payments When Using Sales Receipts

I’m going assume a few things here:

1. I assume that no sales information has been entered yet for this sale.

2. I assume that the Items used on the Sales Receipt were set up correctly, pointing to Revenue (or Sales) accounts

3. I assume that your Preference is turned on to use Undeposited Funds as the Deposit To account. If you are unsure, follow this path:

Edit > Preferences > Sales & customers > Company Preferences tab > in the Receive Payments area, check the box that says, “Use Undeposited Funds as a default deposit to account.”

We will now record customer payment and the sale in a single step:

  • Open QuickBooks. From the Customer’s menu, select Sales Receipts.
  • The Sales Receipts window opens. Select your customer. Enter the date of the sale (should be the same date as when you received the payment), the check number, the payment method, and the Items. The Total should equal the total of the payment.
  • Click Save, and repeat for all payments you need to record. After recording all payments, you are now ready to record the bank deposit.

In QuickBooks, Record the Bank Deposit of Your Customer Payments

Now that you know how to record customer payments correctly, here is how to make sure those payments are recorded as deposits correctly. This ensures that the customer payments appearing in your QB check register match how they appear on your bank statement.

  • Open QuickBooks. From the Banking menu, select Make Deposits. The Payments to Deposit window will open. It has a blue border. Place a checkmark next to the payments you will deposit. Click Ok. QB takes these payments and places them in the Make Deposits window.
  • In the Make Deposits window, make sure the Deposit To account is the right one. Also make sure of the date.
  • Before clicking Save, you can print a deposit slip (if you have QuickBooks compatible deposit slips pre-printed with your account information), or find a blank deposit slip (usually located in the back of your check register) and fill it in with the information on this screen. Be sure to include each check individually, as well as the total.
  • Save the transaction.
  • Endorse the back of the checks with a rubber stamp approved by your bank.
  • Go to the bank and make your deposit.

Check Your Work

In a day or two, sign on to your bank’s online services, and notice the deposit you made. Open QB, and notice it there too. The amounts should be identical, and the dates should be within a day or two of each other. This will make your bank reconciliations go so smoothly.

Leave a Reply