QuickBooks® Billing by Invoice 5.9.16

QuickBooks® Billing by Invoice

No matter the industry, businesses must have an organized method of recording sales and receiving payments. Information regarding the current cash status and accounts receivable can be instrumental in purchasing, hiring and even investing decisions. A need to track payments and open balances for customers arises if a company expects partial or periodic payments for services provided, such as in the construction industry. QuickBooks® offers an easy-to-use tool for billing this type of customer: the invoice.

Invoices versus Sales Receipt in QuickBooks®

Before a business decides to use invoices to record transactions in their accounting file, consideration should be shown to the flow, and type, of normal transactions. Does the business receive payments for services periodically, throughout a contracted period? Are funds received in advance, or in installments based on completion of a project?

Construction companies, furniture stores and others who may offer terms for customers, such as a two percent discount if payment is received within 30 days, choose to use invoices to record transactions. Invoices link directly to accounts receivable balances for each customer listed in QuickBooks®, and can collect partial payments before the balance is fully paid. Payments collected at a later point in time than when services were rendered should also be recorded within an open invoice for the customer, such as in the case of a vehicle repair shop ordering replacement parts to a damaged vehicle.

Small businesses, restaurants, medical offices and retail stores will often utilize sales receipts, primarily for daily sales transactions. The function of the sales receipt is focused on the receipt of payment at the time of sale or service, whereas invoices may be more contractual in nature. Unlike an invoice prepared in QuickBooks®, sales receipts directly affect the cash balance and inventory balance (if utilized as a function of QuickBooks® Enterprise).

Setting up an Invoice in QuickBooks®

Invoicing in QuickBooks® can be broken into three portions: creating the invoice, receiving payment, and making a deposit.

Invoices can be highly customized to include company logos, memo messages, and detailed information regarding the items, rates, terms and charges related to the transaction. At minimum, invoices should reflect enough information to inform both the customer and future users of the document within the business what service was given and the cost related to the service. Invoices can be customized to auto-populate entry fields, further simplifying the data entry process. Since invoices directly affect accounts receivable balances for listed customers, and may be sent or given directly to the customer, each component of the invoice should be carefully checked for accuracy.

Payment may be applied to an invoice using the ‘Receive Payment’ option from a customer’s snapshot display; the following screen displays open invoice balances, and the user may choose to apply the payment to the appropriate bill. The payment is then classified as an ‘Undeposited Funds’ within QuickBooks® until deposited into the bank account using the Deposit function.