Bookkeeping is the foundation of any successful business, and when using QuickBooks Desktop or Online, it’s important to use the systems correctly. Whether handled by a full-time bookkeeper or a dedicated business owner, financial records must be accurate, organized, and compliant to ensure smooth operations. To review best practices that help keep your records neat and error-free, refer to The ABCs of QuickBooks.
A is for the “Application of Payments from Customers against Invoices“
Accurately matching customer payments to the correct invoices is one of the most important tasks in QuickBooks. Without this crucial step, your Accounts Receivable (A/R) reports may be misleading, making it difficult to track cash flow and outstanding balances.
Properly managing Accounts Receivable ensures that you have a clear picture of what customers owe, helping you make informed financial decisions, improve collections, and maintain the stability of your business. By following the correct process in QuickBooks, you can take full advantage of key financial reports that provide insight into your business’s health, including:
- Open Invoice Report
- Customer Balance Summary & Detail
- Accounts Receivable Aging Summary & Detail
- Profit & Loss and Balance Sheet (Accrual Basis)
To ensure accuracy in your bookkeeping and leverage these reports effectively, follow these three high-level steps within QuickBooks’ Accounts Receivable module:
- Create the Invoice – Record the sale to track what is owed.
- Receive Payment – Apply the payment to the correct invoice to update balances.
- Make a Deposit – Ensure the funds are properly recorded in the correct bank account.
Managing Accounts Receivable correctly is essential because it directly affects your cash flow. It allows you to stay on top of customer payments, maintain financial stability, and make strategic decisions for your business’s growth. With the right bookkeeping practices, you can ensure that your financial records are accurate, up to date, and working for you—not against you.
Bernstein Financial Services is a full-service accounting and tax firm that helps business owners meet their financial goals in their personal and professional lives. For personalized guidance, please schedule a consultation appointment with a Principal.