How to Receive Payments from Customers in QuickBooks Desktop?

QuickBooks Desktop is a powerful accounting software used by businesses of all sizes to manage their financial operations. One of the core functionalities of QuickBooks Desktop is its ability to handle customer payments efficiently. Whether you’re dealing with checks, credit cards, cash, or online payments, QuickBooks Desktop can streamline the process, ensuring your accounts are always up-to-date. This comprehensive guide will walk you through the steps to receive payments from customers in QuickBooks Desktop.

Introduction to Receiving Payments in QuickBooks Desktop

Receiving payments efficiently is crucial for maintaining healthy cash flow and accurate financial records. QuickBooks Desktop offers a variety of tools to ensure you can manage customer payments with ease. By correctly recording payments, you can keep your accounts receivable up-to-date, track customer balances, and ensure your financial reports reflect your true financial position.

Setting Up Customer Payment Methods

Before you start receiving payments, it’s important to set up the various payment methods your business accepts. QuickBooks Desktop allows you to customize these methods to suit your business needs.

Steps to Set Up Payment Methods:

1. Open QuickBooks Desktop: Start QuickBooks Desktop and go to the main menu.
2. Navigate to Lists: Click on the “Lists” menu and select “Customer & Vendor Profile Lists.”
3. Select Payment Methods List: Choose “Payment Methods List.”
4. Add New Payment Method: In the Payment Methods List window, click the “Payment Method” button at the bottom left and select “New.”
5. Enter Payment Method Details: Type in the name of the payment method (e.g., Check, Credit Card, Cash, PayPal) and click “OK.”

Repeat these steps for each payment method you accept.

Important Read:- Connect Bank And Credit Cards To QuickBooks Desktop

Receiving Payments in QuickBooks Desktop

QuickBooks Desktop allows you to receive payments against an invoice or even without an invoice. Below are the detailed steps for both scenarios.

1. Receiving Payments Against an Invoice

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: In the Receive Payments window, select the customer who is making the payment.
3. Enter Payment Details:
   • Amount: Enter the amount received.
   • Payment Method: Choose the payment method (Check, Credit Card, Cash, etc.).
   • Reference Number: Enter a reference number if applicable (e.g., check number).
4. Apply Payment to Invoices: QuickBooks will display open invoices for the customer. Apply the payment to the appropriate invoice(s) by clicking on them. The payment amount will be distributed automatically.
5. Save and Close: Once the payment details are entered and applied, click “Save & Close” or “Save & New” if you need to enter another payment.

2. Receiving Payments Without an Invoice

Sometimes you may receive payments without an existing invoice. Here’s how to handle such situations:

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: In the Receive Payments window, select the customer who is making the payment.
3. Enter Payment Details:
   • Amount: Enter the amount received.
   • Payment Method: Choose the payment method (Check, Credit Card, Cash, etc.).
   • Reference Number: Enter a reference number if applicable.
4. Add Payment to Customer Credit: Since there is no invoice to apply the payment to, QuickBooks will automatically add this payment as a credit to the customer’s account.
5. Save and Close: Click “Save & Close” to finish.

3. Handling Partial Payments

If a customer makes a partial payment towards an invoice, follow these steps:

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: In the Receive Payments window, select the customer who is making the payment.
3. Enter Payment Details:
   • Amount: Enter the partial payment amount.
   • Payment Method: Choose the payment method.
   • Reference Number: Enter a reference number if applicable.
4. Apply Payment to Invoices: Apply the partial payment to the appropriate invoice. QuickBooks will show the remaining balance.
5. Save and Close: Click “Save & Close” to finish.

4. Applying Overpayments

If a customer overpays, QuickBooks will automatically add the overpayment to the customer’s account as a credit.

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: In the Receive Payments window, select the customer who is making the payment.
3. Enter Payment Details:
   • Amount: Enter the payment amount, which is more than the invoice amount.
   • Payment Method: Choose the payment method.
   • Reference Number: Enter a reference number if applicable.
4. Apply Payment to Invoices: Apply the payment to the appropriate invoice(s). The overpayment will show as a credit.
5. Save and Close: Click “Save & Close” to finish.

5. Dealing with Bounced Checks

When a customer’s check bounces, it’s important to record this in QuickBooks to keep your records accurate.

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Find and Select the Payment: Locate the payment that bounced and click on it.
3. Record Bounced Check: Click on the “Record Bounced Check” button at the bottom.
4. Enter Bounced Check Details:
   • Bank Fee: If your bank charged a fee, enter the amount and the expense account for bank fees.
   • Customer Fee: If you charge a fee to the customer, enter the amount and the income account for bounced check fees.
5. Save and Close: Click “Save & Close” to finish.

Recording Different Types of Payments

QuickBooks Desktop allows you to record various types of payments, ensuring all transactions are accurately captured.

Checks

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: Choose the customer making the payment.
3. Enter Payment Details:
   • Amount: Enter the check amount.
   • Payment Method: Select “Check.”
   • Reference Number: Enter the check number.
4. Apply Payment to Invoices: Apply the payment to the appropriate invoice(s).
5. Save and Close: Click “Save & Close” to finish.

Credit Cards

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: Choose the customer making the payment.
3. Enter Payment Details:
   • Amount: Enter the payment amount.
   • Payment Method: Select “Credit Card.”
   • Reference Number: Enter the credit card transaction number if available.
4. Apply Payment to Invoices: Apply the payment to the appropriate invoice(s).
5. Save and Close: Click “Save & Close” to finish.

Cash

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: Choose the customer making the payment.
3. Enter Payment Details:
   • Amount: Enter the cash amount.
   • Payment Method: Select “Cash.”
4. Apply Payment to Invoices: Apply the payment to the appropriate invoice(s).
5. Save and Close: Click “Save & Close” to finish.

Online Payments

For online payments through platforms like PayPal, you can record them similarly to checks or credit cards.

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: Choose the customer making the payment.
3. Enter Payment Details:
   • Amount: Enter the payment amount.
   • Payment Method: Select the appropriate online payment method (e.g., PayPal).
   • Reference Number: Enter the transaction ID if available.
4. Apply Payment to Invoices: Apply the payment to the appropriate invoice(s).
5. Save and Close: Click “Save & Close” to finish.

Depositing Payments

QuickBooks Desktop helps you manage deposits by first placing received payments into the Undeposited Funds account, allowing you to combine payments into a single deposit.

Undeposited Funds Account

The Undeposited Funds account temporarily holds payments until you are ready to deposit them into your bank account. This method ensures that the deposit in QuickBooks matches the deposit slip you give to the bank.

Steps to Use Undeposited Funds Account:

1. Set Up Undeposited Funds as Default: QuickBooks typically uses the Undeposited Funds account as the default. You can confirm this by going to the “Edit” menu, selecting “Preferences,” then “Payments,” and finally ensuring the option “Use Undeposited Funds as a default deposit to account” is checked.
2. Receive Payment: When you receive payments (using the steps described in the previous sections), make sure the payment is deposited to the “Undeposited Funds” account.
3. Deposit Payments: To move the payments from the Undeposited Funds to your bank account:
   • Go to the “Banking” menu and select “Make Deposits.”
   • In the Payments to Deposit window, select the payments you want to deposit. Click “OK.”
   • In the Make Deposits window, select your bank account.
   • Verify the deposit total and details, then click “Save & Close.”

Making Bank Deposits

QuickBooks Desktop allows you to combine multiple payments into a single bank deposit, ensuring your records match your bank statement.

1. Open Make Deposits Window: Go to the “Banking” menu and select “Make Deposits.”
2. Select Payments to Deposit: In the Payments to Deposit window, select the payments you want to deposit. Click “OK.”
3. Fill Out Deposit Information:
   • Bank Account: Choose the bank account where you’re depositing the funds.
   • Date: Enter the deposit date.
   • Deposit Subtotal: Verify that the subtotal matches the total amount you are depositing.
4. Add Additional Details: If you need to add cash back or other details, fill them in appropriately.
5. Save and Close: Click “Save & Close” to finish.

Applying Discounts and Credits

QuickBooks Desktop allows you to apply discounts for early payments or apply credits to customer accounts. Here’s how you can manage these adjustments.

Applying Early Payment Discounts

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: Choose the customer making the payment.
3. Enter Payment Details:
   • Amount: Enter the payment amount.
   • Payment Method: Choose the payment method.
4. Apply Payment to Invoices: Apply the payment to the appropriate invoice(s).
5. Apply Discount:
   • Click the “Discounts and Credits” button.
   • In the Discounts and Credits window, enter the discount amount and select the discount account.
   • Click “Done.”
6. Save and Close: Click “Save & Close” to finish.

Applying Customer Credits

1. Open Receive Payments Window: Go to the “Customers” menu and select “Receive Payments.”
2. Select Customer: Choose the customer making the payment.
3. Enter Payment Details:
   • Amount: Enter the payment amount.
   • Payment Method: Choose the payment method.
4. Apply Payment to Invoices: Apply the payment to the appropriate invoice(s).
5. Apply Credit:
   • Click the “Discounts and Credits” button.
   • In the Discounts and Credits window, select the available credit.
   • Click “Done.”
6. Save and Close: Click “Save & Close” to finish.

Handling Payment Discrepancies

When the payment received does not match the invoice amount, you need to handle the discrepancy properly to maintain accurate records.

Steps to Handle Payment Discrepancies:

1. Identify the Discrepancy: Determine why the payment does not match the invoice amount.
2. Partial Payments: If the payment is less than the invoice:
   • Enter the partial payment as described in the “Handling Partial Payments” section.
   • The remaining balance will show on the customer’s account.
3. Overpayments: If the payment is more than the invoice:
   • Enter the overpayment as described in the “Applying Overpayments” section.
   • The overpayment will be recorded as a credit on the customer’s account.
4. Adjustments: If the discrepancy is due to a discount, write-off, or other adjustments, make the necessary adjustments in the “Discounts and Credits” section during the payment process.

Generating and Managing Reports

QuickBooks Desktop offers a variety of reports to help you monitor customer payments and manage your accounts receivable.

Key Reports for Managing Customer Payments:

1. Customer Balance Detail: This report shows detailed transactions for each customer, helping you track payments and outstanding balances.
   • Navigate to the “Reports” menu, select “Customers & Receivables,” and then choose “Customer Balance Detail.”
2. A/R Aging Summary: This report provides a summary of all outstanding invoices, categorized by how long they’ve been overdue.
   • Go to the “Reports” menu, select “Customers & Receivables,” and then choose “A/R Aging Summary.”
3. Sales by Customer Summary: This report shows total sales and payments for each customer over a specified period.
   • Navigate to the “Reports” menu, select “Sales,” and then choose “Sales by Customer Summary.”
4. Deposits Detail: This report provides details of all deposits made, helping you reconcile bank statements.
   • Go to the “Reports” menu, select “Banking,” and then choose “Deposits Detail.”

Customizing Reports

You can customize reports to suit your specific needs by modifying filters, adding or removing columns, and adjusting the date range.

1. Open the Report: Go to the desired report from the “Reports” menu.
2. Customize Report: Click the “Customize Report” button.
3. Modify Filters and Columns: Adjust the settings as needed.
4. Save Customization: Save the customized report for future use by clicking the “Memorize” button.

Using Third-Party Payment Processors

Integrating third-party payment processors with QuickBooks Desktop can streamline your payment collection process, making it easier for customers to pay you.

Popular Third-Party Payment Processors:

1. PayPal: Integrate PayPal to accept online payments directly from invoices.
   • Use the QuickBooks Desktop app for PayPal to sync transactions automatically.
2. Square: Accept payments via Square and sync them with QuickBooks Desktop.
   • Use the Sync with Square app to import sales transactions into QuickBooks.
3. Stripe: Integrate Stripe to process credit card payments.
   • Use third-party apps to connect Stripe with QuickBooks Desktop.

Steps to Integrate a Payment Processor:

1. Choose a Processor: Decide which payment processor best fits your business needs.
2. Sign Up and Configure: Sign up for an account with the chosen processor and configure it according to their instructions.
3. Connect to QuickBooks Desktop:
   • Use the payment processor’s integration app or a third-party app.
   • Follow the setup instructions provided by the app to connect it to QuickBooks Desktop.
4. Sync Transactions: Regularly sync transactions to ensure all payments are recorded accurately in QuickBooks.

Integration with Third-Party Payment Processors

Integrating third-party payment processors with QuickBooks Desktop can further streamline your payment collection process. Here are a few steps and best practices for integrating and using popular payment processors:

1. PayPal Integration

Steps to Integrate PayPal with QuickBooks Desktop:

1. Sign Up for PayPal: Ensure you have a business PayPal account set up.
2. Install QuickBooks PayPal App: Go to the QuickBooks Desktop app store, find the PayPal app, and install it.
3. Link PayPal to QuickBooks:
   • Follow the instructions to connect your PayPal account to QuickBooks.
   • Set up synchronization preferences, such as how often transactions are imported.

Using PayPal with QuickBooks Desktop:

• Receiving Payments: When customers pay via PayPal, the transactions are automatically imported into QuickBooks.
• Reconciling Accounts: Regularly reconcile your PayPal transactions with your QuickBooks records to ensure accuracy.

2. Square Integration

Steps to Integrate Square with QuickBooks Desktop:

1. Sign Up for Square: Ensure you have a Square account set up.
2. Install Sync with Square App: Go to the QuickBooks Desktop app store and install the Sync with Square app.
3. Link Square to QuickBooks:
   • Follow the instructions to connect your Square account to QuickBooks.
   • Configure the settings for how sales and fees are imported.

Using Square with QuickBooks Desktop:

• Receiving Payments: Transactions processed through Square are automatically synced to QuickBooks.
• Managing Sales: Keep track of sales and fees deducted by Square to maintain accurate records.

3. Stripe Integration

Steps to Integrate Stripe with QuickBooks Desktop:

1. Sign Up for Stripe: Ensure you have a Stripe account set up.
2. Install a Third-Party Integration App: Use apps like “Sync with Stripe” available in the QuickBooks app store.
3. Link Stripe to QuickBooks:
   • Follow the setup instructions to connect your Stripe account to QuickBooks.
   • Set preferences for importing transactions and handling fees.

Using Stripe with QuickBooks Desktop:

• Receiving Payments: Payments processed via Stripe are automatically imported into QuickBooks.
• Tracking Fees: Ensure that the fees charged by Stripe are recorded properly to reconcile against your bank statements.

Troubleshooting Common Issues

Despite its robust functionality, you may encounter issues when receiving payments in QuickBooks Desktop. Here are some common problems and their solutions.

1. Payment Not Showing in Reports

Solution:

1. Verify Date Range: Ensure the report’s date range includes the payment date.
2. Check Payment Status: Confirm that the payment was saved and applied to an invoice.
3. Rebuild Data: Go to the “File” menu, select “Utilities,” then “Rebuild Data” to fix data issues.

2. Duplicate Payments Recorded

Solution:

1. Identify Duplicate: Find and verify the duplicate payment.
2. Delete Duplicate: Open the Receive Payments window, locate the duplicate payment, and click “Delete.”
3. Reconcile: Ensure the remaining payments are accurate and reconcile with your bank statement.

3. Customer Balance Incorrect

Solution:

1. Review Transactions: Check the customer’s transaction history for errors.
2. Correct Entries: Edit or delete incorrect transactions.
3. Apply Credits: Ensure any available credits are applied correctly to outstanding invoices.

4. Payment Not Applied Correctly

Symptoms: Payment does not reduce the customer’s balance.

Solution:

1. Check Invoice Application: Ensure the payment is applied to the correct invoice.
2. Review Payment History: Look at the payment history to verify it was recorded properly.
3. Adjust Entry: If necessary, edit the payment entry to correct any errors.

5. Unable to Record Payment

Symptoms: Error messages or system freezes when trying to record a payment.

Solution:

1. Restart QuickBooks: Close and reopen QuickBooks to reset the system.
2. Update Software: Ensure you are using the latest version of QuickBooks Desktop.
3. Check Data File: Run the “Verify Data” and “Rebuild Data” utilities to check for data file issues.

6. Reconciliation Discrepancies

Symptoms: Ending balance does not match bank statement.

Solution:

1. Verify Opening Balance: Ensure the opening balance matches the bank statement.
2. Identify Missing Transactions: Compare transactions in QuickBooks with the bank statement to find any that are missing.
3. Check for Duplicates: Look for and remove duplicate transactions.
4. Correct Errors: Fix any incorrect transaction amounts or dates.

Important Read:- How To Reconcile An Account In QuickBooks Desktop?

Best Practices for Receiving Payments in QuickBooks Desktop

To optimize your process for receiving payments, consider implementing these best practices:

1. Maintain Accurate Customer Records

1. Update Customer Information: Regularly update customer contact details and payment terms.
2. Verify Payment Methods: Ensure all payment methods are correctly set up and updated as needed.

2. Streamline Invoicing and Payment Processes

1. Automate Invoicing: Use QuickBooks to automate the creation and sending of invoices.
2. Enable Online Payments: Allow customers to pay invoices online for faster payment processing.
3. Send Payment Reminders: Utilize QuickBooks to send automatic payment reminders to customers.

3. Regularly Reconcile Accounts

1. Daily Reconciliation: Reconcile payments daily to avoid discrepancies.
2. Monthly Review: Conduct a thorough review of accounts receivable each month to ensure all payments are recorded accurately.

4. Manage Customer Credits and Discounts Effectively

1. Track Credits: Maintain a log of customer credits and apply them appropriately.
2. Apply Discounts: Promptly apply early payment discounts to incentivize timely payments.

5. Utilize Reports for Financial Insights

1. Run Regular Reports: Generate customer balance, aging summary, and sales reports to monitor financial health.
2. Analyze Trends: Use reports to analyze payment trends and identify potential issues.

Conclusion

QuickBooks Desktop offers a robust platform for managing customer payments, ensuring your business maintains accurate financial records and efficient cash flow. By understanding how to set up payment methods, receive payments, handle various types of payments, deposit funds, and manage discounts and credits, you can optimize your accounts receivable process.

By following these guidelines and utilizing the comprehensive tools available in QuickBooks Desktop, you can ensure that your customer payment process is both efficient and effective. If you encounter any issues or need further assistance, consider contacting QB Desktop support at +1-855-838-5977 for professional help.

Key Takeaways:

• Setup: Properly set up customer payment methods to streamline the payment process.
• Receiving Payments: Accurately receive and record payments, whether against invoices or as prepayments.
• Deposits: Use the Undeposited Funds account to combine payments into single bank deposits.
• Discounts and Credits: Apply discounts for early payments and manage customer credits effectively.
• Reports: Utilize QuickBooks reports to monitor payments, customer balances, and reconcile discrepancies.
• Third-Party Integrations: Leverage third-party payment processors for seamless payment handling.
• Troubleshooting: Address common issues with payment entries and reconciliations to maintain accurate records.

Frequently Asked Questions