Volume 5 Issue 2008

An invoice form creates a transaction that will increase sales and show up in reports that list who owes money. Using the 'receive payments' form/window an invoice is marked paid and removed from the open invoice report. Marking an invoice paid can only be achieved using the 'receive payments' form AND marking an invoice listed in the "applied to" section of this form or applying a credit/discount to invoice. By placing a check next to the invoice, using "set credits", or using "discounts", QuickBooks creates a link from the invoice to the payment and marks the invoice paid. Without a link, both the credit and the invoice remain open on your books. Once the payment or credit is linked to the invoice, QuickBooks provides you with a nifty tool to easily find the linked transaction. Open an invoice, receive payment, or credit transaction and at the top of the window the 'history button' provides the details and hyperlinks ('Go To' Button) to the related transaction.

When a customer payment comes in before the invoice is created it is necessary to make a note to link this payment AFTER the invoice has been created. At times a customer sends in a payment without instructions on how to apply the payment. When payment is placed "on account" (not assigned to invoices) it will be necessary to make a note to link this payment AFTER the customer has supplied the missing information. To place a payment on account, from the receive payment window > select the customer > enter the check number and amount > do not place a check next to the invoices in the bottom section of the window > click save & new or save & close, click OK to the pop up information window.

To create a link from the 'prepayment' or 'on account payment' to the invoice : From the receive payment window > Select the customer account > enter $0 for amount > Click once on the invoice > Click on the 'Set Credit' button > Select the credit amount you would like to apply. You can apply a partial credit by replacing the default in the 'amount to use' column with the amount you wish to apply.

Tip: When creating credit memos for customer returns, write-offs, or discounts; It is a good habit to immediately open the receive payment window and apply the credit to the appropriate invoice. This will mark the invoice paid, remove it from the customer statement, and prevent the customer from using the credit inappropriately against a different invoice. For credit memos mailed to the customer, be sure to include a blurb on the invoice that informs the customer how to treat this credit (for example: This credit has been used to offset invoice number 234, please make the same adjustment on your records).

Tip: There is no simple way to move a credit incorrectly applied from one invoice to another. A trick to unlink the credit memo is to change the name on the credit memo to another customer > save the credit, then change the name back to the original customer. This will reopen the credit for application to the correct invoice on your customer's account.