 QuickBooks Online 2023 invoice without using QuickBooks payment options so we can compare it to the use of QuickBooks payment options. Get ready to earn the skills needed to boost your bankbooks on up with QuickBooks Online 2023. Support Accounting Instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems, PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Here we are in our QuickBooks Online test company file using the accountant view as opposed to the business view you can toggle between the two views by going to the cog up top and switching the view down below. We're going to be duplicating some tabs so that we have a couple tabs we can put our reports in and another tab to do our data input. We will do this every time right clicking on the tab up top and duplicating it. We're going to right click on that duplicate a tab as it's thinking and duplicate it again this is where our balance sheet and income statement will go. I will typically tab to the middle now as the one to the right is thinking go to the reports on the left hand side and then open one of the two favorites here which will pretty much always be in the favorites these being our major financial statement reports first the balance sheet and then I will tab to the right and go down to the reports and this time the other one the profit and loss which is also known as the income statement. I'm going to scroll up and close up the hamburger I will typically just verify the range here I like to just type it in 010123 tab 123123 I think that's the easiest way to do the data input January to December it's useful when you're looking at these payments when you're to put in the current date range because that makes it a little bit easier when you're sending out the invoices for the payments if you're testing them out it's a little bit more difficult possibly when you're dealing with payments in other words to try to test something out in the past or in the future in any case we will run this and then I'm going to go back to the tab to the left nothing's in it by the way because we haven't input anything yet as of this point in time balance sheet closing up the hamburger same thing I'm going to go from 010123 tab 123123 and then run that one so now we have our two financial statement reports tapping to the left we have our data input on the left hand side so we've set up our QuickBooks payments now note that if you don't have a bank account set up in the banking area when you first set up your payments then if you go into your chart of accounts which is under accounting on the left hand side then QuickBooks may set up the QuickBooks checking account which is you can see it has this verific this thing here that shows it's basically a linked type of account if you have a checking account that is linked you might be able to set up the QuickBooks payments that are that are tied directly to the checking account that you are using so that's just one thing to be aware of now when I go and actually create an invoice if I go to the end the new button up top and I send out an invoice because I want to be collecting on a payment from a customer you're going to then have the payment options on the left hand side over here now note you might be used to and have like the old layout version of the invoice they are experimenting with the new layout version of the data input on the invoice in essence the data input would should be much the same for the two versions of the invoice this one's still I guess kind of in beta there's a couple things that may not work if you're using some other functions like some like class tracking and whatnot they might be integrated now but there's a couple things that I was experimenting with they haven't fully put in place with this new format of the invoice but this looks to be the way they're trying to move towards but if you want to go to the old layout you can have the old layout up top you will still have similar kind of of payment options just the layout will be looking different so these options are now here because we turned on the QuickBooks payments now of course if we have these payment options on then when they pay us using these payment options we're going to be subject to these fines which they nicely put in here for so the credit card 2.9% plus 25 cents per transaction the bank transfer the 1% with a max of ten dollars per transaction the paypal 2.9% plus 25 cents per transaction so clearly those things you want to keep in mind as you're sending out the invoices like we talked about in a prior presentation so in other words if you're with a client that you work with a lot you might try to maximize the payment option so you minimize the amount of fees which in this case you might say hey look could you pay me with a bank transfer or you might set up a bank transfer without the QuickBooks payments if you can if you think you can get a lower you know with a lower fee even than that if you have the same bank or if you have a paypal account with with them or something and you want them to pay you directly paypal to paypal account or something like that if you think you can have the lower fees however if you have new clients or you have a lot of you know different clients then oftentimes it's easier to get a turnaround of the payments if you provide them as many payment options as you can because then it's more likely that they will have a payment option they are comfortable with and it's more likely they'll make a turnaround on the payment so for now however before using the payment options let's think about a system where we don't use the payment options and we just think about the normal invoicing and receive payments so that we can then compare that to putting the payment options in place now before we do this one more thing to note i'm going to close this back out if i hit the plus button up top we're talking about the customer cycle here so usually when we're in when we're in a customer cycle how you how you deal with your customer cycle will depend on the type of industry that you are in so we're dealing with an industry here where we're thinking we have to send out an invoice but you might be in an industry where you have a cash based system with sales receipts or possibly just using bank deposits so for example let's jump on over to the flowchart just to get an idea of this this is the desktop flowchart but it's just a nice flowchart to think about the customer or revenue or sales cycle which is also applicable to the online system and so this will help us to see how the the payments are going to be integrated into our accounting system so notice that if you're in the type of business like a gig work type of business then then you might have a very simplified format or structure or flow for revenue generation for example if you just get paid by youtube you're a youtuber and you get paid by youtuber well you're just going to wait till youtube pays you you're not going to send them an invoice you're not going to send them a sales receipt they're just basically going to give you a deposit and you might have a system where you wait till it goes through your bank and you might have bank feeds so when the deposit goes through your bank you'll see it as a deposit because it's an electronic transfer you'll see it came from youtube or whoever you know whatever and you'll be able to add it as a deposit and the other side going to revenue that would be the most simplified kind of method and you don't even need to send anything out to prompt them to pay you one problem with that however is that the deposit form isn't designed to record revenue so you don't get as much detail on the sub reports breaking breaking out the information by customer and by item because the customer and items are usually tracked with the sales forms the sales receipts and the invoices now if you have a bit more complex system but possibly still a cash based one then you can imagine a cash register for example if you have a cash register in a restaurant or something like that then you get paid at the same point in time you do the work you provide the food at a restaurant they pay you at the same point in time and we typically use a sales receipt form in QuickBooks to record that type of transaction the reason we don't just record a deposit usually is because oftentimes the transaction isn't going directly into your bank more and more we have electronic kind of transfers and whatnot but still usually oftentimes you're going to get paid by some kind of processor even if it's electronic like a credit card or something and then the financial institution dealing with the credit card is going to take that information bundle it in some way and then put it in your bank account or you might be selling cash kind of transactions where you're going to say you're receiving cash transactions and then at the end of the day you're going to take that and put it into your bank in a lump sum whether it be electronic with credit cards or cash or some other kind of payment processor we end up with a problem which is that i might make a bunch of like five dollar sales but when i get the deposit finally hitting the bank in the actual bank it's going to be grouping those deposits together in some way shape or form so if i put my deposits into the bank account directly i'm not going to be able to reconcile the bank statement to my deposits very easily because the grouping of those deposits will be different so one way to deal with that is we have this clearing account that happens i have the sales receipts and then when i receive the payment uh uh or the sales receipts are going to go into an undeposited funds or funds to be deposited a clearing account then when i deposit them into the bank either i take the cash and go to the bank in a lump sum deposit or the credit cards in some way or grouping them together i want to make sure that i use the deposit form grouping it in my system in the same grouping that it's going to show up on the bank statement to make the bank reconciliation easy that's going to be one of the issues that come up and then if i have an invoice situation you have a similar situation but now instead of doing the work at the same point in time i did the work first like an accounting firm and and notice the differences here are going to be driven by the industry you're in it's not like you can just pick willy nilly you know you're gonna have to well the accounting firm this is how things typically work you do the work first and then you bill the client oftentimes so you did the work you're gonna send out an invoice the invoice is going to be increasing accounts receivable which now you can have to track to make sure that they pay you and the other side is going to revenue no cash is impacted by the invoice and then once the invoice has been received they're gonna have to they're gonna pay you in some way shape or form and so when they pay you then we're gonna have the receive payment form which is going to reduce the accounts receivable because they've paid us now and the other side is going to go into either cash or i might have the same issue that we had with the sales receipt i might need to put it into an undeposited clearing account because i might be collecting multiple payments on invoices during a day with things like credit cards or possibly cash transactions so i need to be able to group them when i make the deposit into the checking account in the same format so i might then have a deposit form taking it out of undeposited funds or funds to be deposited and putting it into the checking account in the same number the same grouping as we'll show on the bank statement making bank reconciliation easy so this issue of going from the invoice to the receiving payment then to the deposit is what may be made easier if i've got my my payment automatically being collected because then i would like the quickbook system to be able to say record the received payment and then make the deposit in the proper grouping that it'll it'll show up on the bank statement so if we were to use the quickbooks payments we would typically send out like an invoice when they're going to pay us and then allow them to pay us with some kind of payment option on the invoice or we could send out a link right a link which would in essence you know create a sales receipt okay so let's see what that process looks like in practice without the the payment and and then we'll see and then we'll go back and do some and send some out with the payment option so if i go new and i did work and now i want to bill the client so i'm going to bill them i'm going to send them out an invoice so we're going to send them out an invoice hopefully hoping that they turn around and pay of course that invoice i'll try to use this new format even though i'm not completely used to it all right so we're going to add a customer down here so i'm going to say add a customer and then i'm just going to make a generic name i'm going to say company company one generic name on the customer name and save it so so i'm i'm putting the bare minimum obviously if this was a repeat customer you might want a lot more detail on the customer but we're just doing the minimum for the example here so customer number one there's the invoice this is the term in terms of when we want to be paid so we expect to be paid within net 30 so if the invoice date is 5 26 23 then 30 days later is when we expect to be paid on 6 25 23 and okay and then we have our tags i'm not going to add any tags here and then our products so we have the generic products of that that have been given by QuickBooks so i'm not going to deal with inventory at this point i'm just going to use their service items so i'll say hours and let's say there was one hour and let's just put like i'm going to do some fairly low dollar amounts five dollars and there we have it so we could have multiple line items on the invoice if we needed to add another line item for example and and then we have the payment options down here now i'm going to try to say here we're not going to use the payment options so i'm going to go to the tab to the to the right and i'm just going to turn off all the payment options so we're not going to use the payment options either because we're imagining we don't turn we didn't turn on the payment option so we don't have them or we have a situation where we're saying hey look i would like them to pay me in some other way that we have agreed on possibly send me a check and then i can just deal with the check maybe i like that system i don't deal with any fees on the check or you might give them some other format to pay you so you might you might tell them you could pay me PayPal to PayPal or something like that if you think there would be less fees or bank feed or your bank if you have the same bank or something you think there'd be less fees or something like that possibly other payment options that you could deal with in that way so what's this going to do this is an invoice that means it's going to increase the accounts receivable the other side is going to be going to a revenue account for the five dollars and then we're going to have to wait and receive the payment and whatever format they're going to give us the payment so i'm going to we can we could still send it out if we had their email address and they could still get it by email they just don't have the link in the email in order to to pay it in that way we also have a link item so i could do the link option as well so that's a newer item here we need the email address for that so i'm not going to do that i'm just gonna say save it so let's go over here and just save and close okay and let's check it out so if i go on to the to the balance sheet and run this now we have in the balance sheet we've got our accounts receivable if i drill down on that then we're going to see our invoice if i go into the invoice then we see our invoice beautiful closing that back out going back on over exit in here the other sides on the profit and loss so if i run the profit and loss there's our our income that's being recorded on the profit and loss we can also track the receivable go into the first tab and that's going to be under the the sales information and we can look at all the sales stuff here and track the amount that's due and we have the customers on the right hand side and i can track my customers this way as well so let's do a couple of them i'm actually going to do another invoice and add another one so that we have a couple invoices so we can see that grouping of the payment problem so i'm going to tap through this again and let's say we're going to add another customer add a customer this will just be customer customer number two and again i would need the email address of course if i was going to email them the invoice which is quite common these days whether i'm using payments or not but i'm just going to close it for now we'll deal with that later and i'm going to keep everything up top the same and this one we'll say is hours but it's going to be four dollars for the hours just to switch things up here so this is going to increase the accounts receivable the other side's going to go to sales for the four dollars and my payment options i'm going to turn off the payment options we don't have any payment options uh so there's the four dollars and then i'm just going to save and close it save and close it so we could still send it by email without the payment options and so on and so forth so if i go back into the balance sheet and we refresh it running it now we've got the nine dollars in the accounts receivable the five and the four on the profit and loss we've got the nine dollars in income back to the first tab if i refresh this screen to see my customers i should have two customers now there's our two customers so now we are at this point we made the invoice we have accounts receivables up at this point in time now notice there's a couple things that could happen from here depending on your workflow uh they might if they send if you have a payment structure where they send you a check or they pay you through your bank but not using the payments or something like that or they pay you paypal to paypal uh or something like that then you're going to have to enter the receive payment here now if you get a check or something you could you could easily you can enter that when you get the check or if you see something when they when it clears your bank account you can enter it at that point in time you might also just try to simply use your bank feeds so if they're using a transfer to from paypal to paypal or something or to your bank account you're going to see the deposit that is going to go into into your bank account so you might try to use the deposit to match up to uh to the invoices and that way you can you could try to connect your deposit to the invoice when they pay you so there's a couple methods now oftentimes if you if you're dealing with a situation where you don't send out like a whole lot of invoices so it's pretty clear and possibly higher dollar amount invoices so it's pretty clear when you get paid if it were an electronic transfer that the payment is should be attached to that particular invoice because of a unique dollar amount because there's not a lot of different payments then the system might be able to just match it out with uh with the bank feeds as the deposit comes through with an electronic checking account you can kind of connect it to the bank feeds but if you get paid by check or something like that you have uh different forms of payment then the next step would would be to to have the receive payment so let's use the receive payment option here the receive payment form notice if you if you connect directly to the bank and you use the bank feeds when you match up the bank feed transaction then then uh QuickBooks will will basically make the receive payment and the deposit form for you in that kind of matching process but let's imagine we got like a check or two checks or something like that or it was paid and and we're entering it as we go so the next step would be that we're gonna say receive payment so let's say receive payment from customer number one and so I'll go into that let's say this happens on uh the 27th and the receive payment and there's the invoice down below so what's this gonna do it's gonna reduce the accounts receivable and the other side uh is gonna go actually into our checking account and we have it telling it that we want to put it into this uh cash account at this point in time let's actually set up a a another checking well let's put it there I'll just put it to the cash account that's gonna go into our cash account so let's say save it and close it save and close so if I go back on over here we're gonna say run this and now we've got five dollars in the cash account accounts receivable went down is now down to the four dollars and we see the activity that's happening here the five dollars went up with the invoice down with the payment we're left with the four dollars the other invoice going back on over exit nothing happened to the income statement when we actually received the payment it's still at nine dollars if I go back to the tab to the left let's do the same thing for the four dollars receive the payment and we'll say that happened also on the 27th and it's an invoice so this is going to increase our cash account the other side decrease in accounts receivable save it and close it tab into the right now we've got our our cash account has the nine dollars which is like our checking account here tabbing to the right we've got nine dollars in the sales still so there we have that okay so now we're here in our process and uh and we've got our receive payment form now notice what we did here is we put them both into the checking account directly so I put them directly into the into the checking account however if we were having credit cards or something like that uh or if we were collecting cash transactions or something like that it might be problematic to put them directly into the checking account here because when I try to tie this out and reconcile to the bank account the bank account might have a lump sum of nine dollars whereas our checking account has two items and if you have a lot of transactions it could have many items that add up to that lump sum total making the reconciliation difficult that's when you would need the clearing account so to deal with that let's show you that I'm going to go back into this one here and show you the method to deal with that it's usually we're going to put it into this payment to deposit account so I went back in I'm changing it to the payment to deposit instead of the cash account save it and close it and then I'm going to do the same thing to the second one here uh let's go back exit so now let's go back into the cash account and I'll do the same thing to the second one so I'm going to go into that number and I'm going to say I want you to make this go to the payment to deposit account save it and close it and say yes and so then I'm going to go back on over exit so now we've got nine dollars in the payments to deposit and now if they were cash payments I can imagine going to the bank with that lump sum nine dollars not five dollars and four dollars separately and putting it into the bank account at one lump sum or you can imagine a credit card or payment process or doing a similar type of thing electronically taking all of your payments for a certain time period and putting it into the bank account as one lump sum and that's the issue that's one of the issues we often have to deal with that becomes a problem because if we're receiving the payments one invoice at a time and they hit our bank one invoice at a time that's not a that's fine we can we can then put it directly into the checking account that's usually pretty clear but if we have some kind of payment processor like a credit card or we're taking cash sales or some other payment processor that's grouping the payments before they hit our checking account then we have this grouping issue that we want to be pointing out okay so then the next step then that would put us right here but we put it into undeposited funds now we're going to make the deposit so if I go back to the left hand side and we say new and I'm going to say let's make the deposit the deposit form now is going to show those two deposits I'm going to check those two off which now adds up to the nine dollars so what's this going to do it's going to deposit to the checking account but not in the format of five dollars and four dollars separately but one nine dollar amount the nine dollar amount being the amount that's going to tie out to the lump sum deposit actually in the bank reflected on the bank statement so I'm going to say save a new or save and close balance sheet run it so now we've got the nine dollars in the cash account but it's in there with one deposit form which means when we reconcile it it'll be in there it'll show that one deposit of the nine dollars exit and then the other side decreased the payments to deposit so it is back down again so now that one is back down looks good okay so you can see that if we have this if we have this middle issue of having to group our deposits uh that becomes that becomes a tedious task that's something to kind of deal with if we have invoices that are being paid one at a time and I can easily identify that one payment that's going into my checking account and tie it out to a particular invoice without having this grouping issue which often arises with credit cards some other payment processors and cash transactions often for lower dollar amounts of sales that are going to be grouped together in some bundling fashion if I don't have to deal with that then it's pretty easy to just receive the payment and tie it out but if I have to deal with that bundling stuff you can see that added step becomes a headache okay so that's the that's the the general idea now if you're so if you're using the quickbooks payments it may allow us to alleviate that problem a little bit as well so we have the cost of the quickbooks payments that comes into play so if I go back on over here and if instead as we'll test out in the future presentations we use the payment options and allow them to pay us with the quickbooks payments now because we're using the integrated quickbooks payments uh we're gonna have the fee for it so that's one thing to consider but when they pay us then hopefully quickbooks will be able to automate some of the receipt processes recording the receipt of the payment and if there are bundling issues be able to properly bundle the receipts that we're getting to put it into the checking account in the same grouping as we'll show on our bank statement making the reconciliation process easy so from so in comparison then the invoice using the payment methods one it cost it could cost more so that's the downside but on the plus side it gives obviously the customer more payment options and which makes it easier for the turnaround possibly to happen and if you have to deal with this issue of of bundling payments in order to have a deposit that matches what's on the bank statement because of credit card bundling payment processor bundling or cash kind of or bundling kind of system then using the the payment processor hopefully will allow into it to automate that system more easily so that when you get the payment in whatever format that they choose they will properly if they choose a credit card for example they will properly bundle the credit card payments that are that are ultimately going to be paid out to us possibly for multiple invoices and whatnot and and then allow it to hit the bank in the in the proper grouping so that the bank reconciliation will happen more easily so we'll test out some of that in future presentations