One of QuickBooks’ useful reports is the Open Invoice report (Reports > Customers & Receivables > Open Invoices) to help you stay on top of money owed to you.  The report lists customer unpaid invoices.  Have you ever used this report and found a customer listed with a zero balance?  Why is it showing up on the Open Invoice report?  (See illustration below). 

QuickBooks Open Invoice with Zero Balance

 When entering a customer payment, the default in QuickBooks (in Edit > Preferences > Sales & Customers) is to Automatically apply payments. This means that when you enter the upper part of the payment window, QuickBooks will automatically checkmark a matching or older payment due in the payment window.

QuickBooks Preference: Automatically Apply Payment

If you turn off this feature, QuickBooks does not enter a checkmark against open invoices. The user must do it.

Why would someone want to turn that off?  QuickBooks sometimes applies the payment in the wrong place. It “guesses” which invoice to apply the current payment to. If the user is not paying attention, the payment can get applied to the wrong open invoice.  This is potentially a problem for businesses that have multiple open invoices for any one customer.

By removing the checkmark for “Automatically apply payments,” the user must proactively place a checkmark next to the invoice the payment is intended for.

Occasionally the user may forget to checkmark the invoice being paid by the payment. In a simple scenario of one payment paying one single invoice, the result will be the payment is noted for the customer, but is not specifically applied to an invoice. Resulting in a zero balance for the customer, but the invoice is still considered “open.”

The illustration below shows a Payment that was entered, but notice there is no checkmark in the first column, which would apply it to that invoice. The customer gets “credited” for the payment, but the invoice is not cleared. 

Place a Checkmark in the First Column to Apply to Invoice

Fixing this is easy. Simply open the payment, and place the checkmark next to the invoice it pays in the lower part of the payment window. Now when you run Open Invoices, the invoice should no longer be in the report.

As long as you are setup correctly to do so, it’s easy to print vendor 1099 tax forms from QuickBooks.  There are 4 essential steps leading up to accurate 1099s:  Setting up the vendor as a 1099 vendor (including their tax id), mapping the expense categories related to those vendor expenses, properly paying the vendor using those expense categories, then buying the 1099 tax forms (forms can be purchased from our link to Intuit Forms & Supplies on the QuickBooks training page) and printing the forms through Vendors > Print 1099s…

These are the steps for marking vendors (people or entities you buy products or services from) as 1099 eligible:

1. From the Vendor Center, choose Edit Vendor.
2. On the Address Info tab, make sure:
3.  
   • The vendor’s legal name appears in the First Name, M.I., and Last Name fields.
   • The vendor’s address, city, two-letter state abbreviation, and zip code are complete.
4. Click the Additional Info tab.
5. Enter the vendor’s Tax ID number. If the vendor is a sole proprietor, enter the vendor’s social security number. Otherwise, enter the vendor’s nine-digit tax identification number.
6. Select the “Vendor eligible for 1099” checkbox.
7. Click OK to close the Vendor record.
8. Repeat steps 2-8 for each Vendor that needs a 1099

The additional steps for completing the 1099 process will be covered in a future post.

Are you having trouble with QuickBooks when creating a new invoice that it seems to have a random date instead of today’s date?  You can set QB to default to today’s date when opening a new invoice form.

Go to Edit > Preferences
Click on the General category > My Preferences tab
Near the bottom, under Default Date to Use for New Transactions click “Use today’s date as default.”

Now you should be able to open a new invoice that is automatically dated with today’s date.

See you in class!

Melissa, The Computer Tutor
Computer Training and more

As a QB ProAdvisor, I visit with many people using QuickBooks and see many common errors over and over again, particularly among businesses who did not get training.  Here are my top five:

1. Not using the Open Windows panel for easy navigation.

QuickBooks Open Windows List

This one is simple, yet I see relatively few people using it. In order to easily switch between multiple windows already open in QuickBooks, use the Open Windows list.  Activate this on the View menu:  View > Open Windows List.

2. Failure to regularly reconcile bank accounts AND credit card accounts.
If you don’t keep up with reconciling your accounts, including credit card accounts, QB can’t help you keep in touch with your financial status. It’s easy to miss deductions made by the bank – and trying to play catch-up on several months worth of statements is no fun!

3. Improper handling of credit card expenses.
Expensing a credit card payment as a “credit card expense” is not the proper way to track expenses charged to a credit card.  There are two methods here – the right one for you depends on whether you pay off the entire balance each month or if you ever carry a balance forward. If you ever carry a balance forward, set your credit card up in the Chart of Accounts, and reconcile the account each month. Make the credit card payment at the end of the reconciliation, “expensed” to the credit card in your chart of accounts.

4. Confusion over bill paying versus check writing.
A symptom that this confusion has occurred is an Accounts Payable that’s not accurate, with your QB showing you still owe a bill you know you’ve paid.  If you enter a vendor’s invoice as a bill, you must pay it as a bill, which is not done by the “Write Check” method (even though you’ll be issuing a check).  If you have done this, and you see that you have written a check to pay for the outstanding bill, simply delete the bill. Open the bill, click Edit > delete bill (or you may void the bill, also on the edit menu).

Is it necessary to enter a bill for everything?  No.  If you are going to be paying an invoice immediately on receipt,
simply “Write a Check” (in QB).  It is not necessary to enter it as a bill first, unless your accountant or company policy requires everything go through QB Accounts Payable.

5. Improper handling of customer invoice payments.
The symptom of this problem is an Accounts Receivable that shows customers still owing you money when you know you have deposited their payment. If there is an invoice for a customer, you must “Receive Payment” on the invoice in QB. After receiving payment, make the QB deposit from Undeposited Funds for all checks being deposited that day.

Remember – the single best thing you can do to improve your
confidence and productivity at your computer is to get training.
We can help.