Cleaning up of Customer Balances in QuickBooks
The customer is the most important aspect of every business. The Customer Center in QuickBooks appears as it is very essential in managing a business. A regular run through your Customer list makes it easier to identify things that have to be corrected and it will also help you avoid confusion in the future.
By opening the list of the Customers, the users can easily identify a customer with an unpaid invoice, a zero balance, or an available credit. It is the best starting point to check whether the customer balances are correct or not.
Some other A/R (accounts receivable) reports can also be helpful. if the amount is collectible or the amount needs to be refunded, then below are some of the important tips to make sure that 0 (zero) customer balances will appear as zero.
Credits and Refunds
There are some cases where the customers return items, either paid/unpaid, or sometimes, as a result of unforeseen events like fail to deliver the merchandise or that product is not what the customer was expecting.
This is when you have to decide whether a Credit Memo or a Refund will be used or not. A Credit Memo can be used to offset the outstanding balance.
It is applicable if a customer returns or cancels any item before paying for it, or when they do not want to get their money back now and want to use it as a payment for their future purchases.
On the other side, the Refund option is used to reimburse the customers for overpayment or any other paid services or items. In this scenario, if there is an available credit or a negative amount showing in the ‘Open Balance’ column for a customer, then it can be handled by processing a refund.
In QuickBooks, the foremost thing to keep in mind is that a refund can either affect the A/R (accounts receivable) or the bank balance.
And second thing is that there are two ways of processing a refund according to the purpose i.e. to offset an available credit or to reimburse the customer for their returned products. The Refund Receipt can also be used without affecting the customer’s balance (i.e. when it is already zero).
To do this task:-
Step 1 –
Click on Plus sign, and select Refund Receipt to open the Refund Receipt screen.
Step 2 –
Fill up the necessary fields and save your transaction.
However, when the A/R (accounts receivable) is affected, as it is the case with an overpayment. Then, an advance payment with no invoice or sales receipt, or just to offset an available credit, then a Check or an Expense needs be created.
To do this task:-
Step 1 –
Open the ‘Check’ window.
Step 2 –
Fill up the fields, and make sure to select the Accounts Receivable for the Account.
Step 3 –
Now, save the transaction.
Step 4 –
Link the check to the open credit or the unapplied payment.
Step 5 –
Open the ‘Receive Payment’ window
Step 6 –
Fill up the Customer and Date fields or the Memo field if required, and leave the other fields such as Amount, Payment Method, and Reference Number blank, including the Deposit as well.
Step 7 –
Now, put a check mark on both the Check and the Unapplied Payment.
Step 8 –
Save the transaction.
Entering a Credit Memo will affect the customer’s balance. However, it still needs to be applied manually against the invoice. Once you’ve created a Credit Memo, then link it to the invoice by recording a payment as above.
You can also opt for the Hosted QuickBooks where you don’t need to worry about any feature or method as it will be handled by the experts and you can focus on your key responsibilities.