Using QuickBooks for invoicing might sound like a great idea at first, and to be honest it is. As long as you understand how the process works. Don’t worry, I'm going to walk you through it.

“Ideally” , there are four steps in this process:

Step 1: An invoice is created by you and is sent to your client. This is Accounts Receivable (A/R).

Step 2: When the client views and makes payment on the invoice, QuickBooks auto-generates a “Receive Payment” entry. This will remove the balance your client owes you from your A/R balance. The payment then gets parked in the “Undeposited Funds” account until the amount is actually deposited into your bank account.

Step 3: When the payment is deposited in the bank, QuickBooks creates a “Deposit” entry and matches it with the “Receive Payment” entry from step 2.

Step 4: When the payment is cleared and reflected in the bank, on the banking screen, under “For Review” the “Deposit” entry from Step 3 matches the received amount and you will click on “Match”.

Looks not too terrible, right?

Until you get paid, not via QuickBooks, but with 3rd party payment processors like Stripe or Square, or just a bank wire transfer, or start using different software for invoicing.

Things get a little more manual on your end.

You will have to do all 4 steps yourself without relying on QBO’s auto-generated entries.

Why is it important to follow these steps when recording a payment for an A/R invoice in QBO:

  • To avoid double reported income on your P&L!

  • Accurate information on your company’s financials

  • Properly calculated quarterly estimated taxes

  • No mess (or less mess) to clean-up when getting your books ready for tax season

Now, let me show you the actual process. Click the link to watch 3 minute video and don’t forget to save the link, so you can always go back to it when recording payments for invoices.

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