 QuickBooks Online! Customer Accounts Receivable or Get Paid Cycle! Get ready to start moving on up with QuickBooks Online! 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. Using the free QuickBooks Online test drive searching in our search engine for QuickBooks Online test drive selecting the option that has Intuit.com within it, Intuit being the owner of QuickBooks Online. We're going to be using the United States version and verifying that we're not a robot. Zooming in by holding down control up on the scroll wheel currently at 125% on the zoom in. Also note if I hit the cog drop down we're currently using the accountant view as opposed to the business view. We'll try to toggle back and forth between the two views so we can see the locations under both of them. We're going to go to the tab up top right click on it and duplicate it and then right click on the duplicated tab. We're going to put our major financial statement reports in here as we always do in our setup process back to the middle tab as that one to the right is thinking. And we're going to go to the reports on the left hand side going on into that balance sheet report as that is thinking. I'm going to go to the tab to the right reports again on the left hand side this time the profit and loss. I'm going to close up the hamburger scroll up to the top range change for the current period selecting the starting point 010122 tab 123122 that's January through December 2022 run it to make sure it updates then tab to the left and scroll up to the top close up the hamburger range change or 10122 tab 123122 tab and then run the report. That's the setup process we do every time going back to the first tab. Now if I hit the drop down up top and the new button and prior sections we've been taking a look at what I would call the vendor cycle the cycle of transactions through that section now we're going to move on over to the revenue side of things you might call it the revenue cycle of the sales cycle the accounts receivable cycle the cycle in which at the end of it we expect money to be coming in deposits to the checking account for goods and services we provided to customers we also once again have to understand the terminology that's used in the QuickBooks software and that it will differ often times than the terminology we use even in accounting world outside of the software in other words customers term we as a business owner are still customers of our vendors our vendors the people we buy from see us as customers so we can call ourselves customers but work from the accounting software perspective the customers represent people that we sell to clearly and that's I think a little bit more straightforward often times than the term vendor or the term bill which can get a little bit muddled up so customers are the people that we are selling goods and services to in order to generate revenue revenue generation is basically the goal of the business from a financial kind of standpoint and then of course we've got the forms that are going to be involved in the revenue generation the major two revenue generation forms are going to be the sales receipt that's the form we would use on a cash based type of system where we have a cash register for example and then we've got the invoice up top which is the form that we're typically going to use on an accrual system in a way that we're going to have to record the sale even though we haven't yet received the money and track the receivable now this gets a little bit tricky because you might also say well what about the deposit form I don't even see it here under the customer section is it that part of the customer cycle given the fact that we're expecting money to be going into our business at the end of the cycle it's over here in other partially because we might have deposits from things outside of customers not as many but we might put money into the business ourselves with a deposit we might get like a loan for example also note that if we use the deposit form as the form to record revenue generation instead of these two forms we can lose a little bit of detail because the deposit form doesn't have the capacity to record the items in the same way as the invoice and the sales receipt so I'm going to discuss that a little bit more by going to a flow chart notice that the QuickBooks Online has a flow chart here in the dashboard but I think it's easier to look at this flow chart which is actually the desktop version flow chart it's just any kind of flow chart just to look at the accounting cycle and think about it in general and how we're going to use it for our particular business within QuickBooks Online so we're focused here on the customer cycle and I want to think about it from the easiest type of cycle to the most difficult type of cycle the easiest kind of business that you can have basically to do your bookkeeping in on the customer side of things would be a cash based system but not just a cash based system one in which you can rely on the bank feeds to go through before you record any transaction which is not a full service accrual system that's more of a not quite full service accrual system but an easy system to use it can only be used however if you're in a certain type of industry like gig work for example if you're getting paid by platforms like Google or Amazon and you could just wait till the money clears your bank and then you're just going to record it as revenue once it clears and that case you will in essence be using a deposit form but through the bank feeds the bank feeds will come through you're going to record it as revenue at that time and the system will see that as in essence a deposit type form so you'll still be in essence using a deposit form now you lose some detail with the deposit form because if you're not using an invoice or a sales receipt you're not using the same kind of items that are set up which means you don't have the same capacity to run sub ledgers for sales for example run a sub ledger breaking out your sales by the items that you sold the goods and services you sold and you might not be able to run a sub ledger report as easily even for the customers even though on the deposit form you could usually pull the customer from the information on the deposit electronic transfer in the bank feeds so if it's coming from Amazon you could say it's Amazon money come from Amazon and you want to add that detail if you can but you still might not be able to run the subsidiary reports breaking out your sales by customer because the deposit form isn't really designed to record revenue so but it still might be totally worth doing in that kind of industry now the next step up of complexity would be having a cash based system where you have a cash register in which case you have to do a full service cash based system meaning you record the transaction and then they're going to clear the bank and then you use the bank feeds or bank reconciliation process or both in order to reconcile what you did to what the bank did separately so in that case if you have a cash register for example you don't want to just collect all your money from the cash register say it's cash and say you're selling five dollar transactions and then deposit it into the bank and then wait till it clears the bank before you record the revenue you could do that but usually what you want to do from an internal control standpoint is record the transaction at the point of sale of the check register and then at the end of the day you can kind of tie out what you sold on the check register to what the register says you sold you can count your cash and tie that out to what the register says you sold and give yourself an internal control now at the point in time that you're putting transactions into the register you might think that you would just deposit it into the checking account every time you got cash I'm just going to say I got cash I'm going to increase the checking account by five dollars by five dollars by five dollars or whatever you're selling but you don't really want to do that either because when you actually deposit the money if it's cash for example or credit cards you have a similar issue of this grouping problem when you deposit it into the bank physically you're going to deposit it all together in one lump sum of like two hundred dollars instead of a bunch of five dollar transactions and so when you go to reconcile using the bank feeds or the bank reconciliation you're going to have to reconcile these five dollar transactions that you put into the system versus the two hundred dollars that you put in that the bank sees as one lump sum therefore you typically could use a clearing account a holding account a petty cash account and undeposited funds so when we have the cash register we record the transactions the sales happen at this point in time it allows us then to enter the items it allows us to track our sales by item and put our money then into an undeposited funds the money we're holding on to so that when we deposit it into our system the checking account in our system the grouping of the deposits will match what clears the bank making the reconciliation process as easy as possible so that's the second easiest kind of system and then the third system is a full accrual type of system that's a system where we have to invoice someone and remember you can't really just choose which system you want you can't be like well I'm just going to do I'm just going to do my stuff by the bank rex it's easy as possible you can't do that if you're in an industry where you have to invoice people so if I'm a bookkeeper and people expect that industry expects that I do the work first and then build them well then that's probably what I'm going to have to do and that means I'm going to have to use an accrual system so if I have an invoicing system like a bookkeeper an accountant tax-preparing often times or landscaping or something like that then I do the work first and then I invoice with the invoice now the invoice is one of those terms that gets quite mixed up or quite complex because the invoice is usually from an accounting standpoint what we use to bill you might say which would be the indicating a bill form but to bill the customers for work that we did so from an accounting standpoint we call invoices the things the form that we used to charge the customer for goods and services we provided on account meaning they're going to pay us at some point in the future as opposed to the sales receipt which represents the data form we're going to put if we collect the money in some way shape or form cash or credit card or whatever at the same point in time we do the work at the cash register for example so the invoice then is going to when we issue the invoice it's going to increase in accounts receivable account which adds another level of complexity because now we've got these IOUs customers owe us money and the sale will be recorded at this point in time then at some future point we're going to have to collect on the money that we were expected for the work that we did with the receive payment and we have the same issue with the receive payment as we had with the create sales receipt of do I want to record this directly into the checking account at this point in time or maybe I'm going to have a grouping of multiple sales receipts that I then want to put into the checking account in one lump sum so I can reconcile in other words if I get multiple receipts from invoices for cash and then I'm going to deposit them into the bank at the end of the night as a group lump sum I don't want to record these sales receipts directly into the checking account because I'll end up with that same kind of issue where I won't be able to reconcile very easily and so therefore I might put these into an undeposited funds account and then deposit them into the checking account recording them as a deposit in the checking account in the same grouping as is actually going to be physically going into the checking account with multiple receive payments and or credit sales receipts that will then show up on the bank statement so I can reconcile as easily as possible so if I'm going to use my bank feeds in this kind of transaction again I've got to think where the bank feeds going to fit in we'll talk more about that when we get to the bank feeds section but just note it's a little bit more complex in that system also note that if you have inventory that's going to complicate things as well because we saw that the inventory kind of strides both of these payment cycle and the receipt cycle or the vendor cycle and the customer cycle and we have different formats of inventory we might say the easiest thing to do with inventory would be to try to stay in a cash-based system if I try to stay in a cash-based system with inventory when I buy the inventory I'll just increase the inventory account but I won't record the other side going to cost of goods sold when I buy it I'll expense it when I purchase the inventory and in that way when I record the sale I can just record the sale side of things like similar to a service account and that would be the easiest thing to do if you have like custom inventory you're doing custom projects you're buying inventory for a particular project you're just going to expense it when you buy it you finish the project and then you charge the customer but if you have a significant amount of inventory then you got to think do you want a periodic inventory or perpetual inventory system a periodic inventory system might be one where you track the inventory outside of QuickBooks and say Excel and whenever you purchase the inventory you increase the inventory account in QuickBooks but not the sub ledger of the inventory by unit and then when you sell the inventory you just record the sales side of things not the decrease in inventory or cost of goods sold and then you make periodic adjustments based on your physical count of the inventory and the inventory cost of goods sold equation beginning inventory plus purchases minus ending inventory adjustments if you're doing a full service inventory in the system then a perpetual inventory system then when you buy the inventory it will not only increase the inventory account but also the sub ledger tracking by unit when you sell the inventory you're going to have to use an invoice or sales receipt as opposed to a deposit form because these are the two forms that are designed to connect to the items that will decrease the inventory accounts automatically when you record them so that's going to be the overarching kind of forms so you got to think about what kind of business am I in and what's going to be the general flow for the revenue cycle how can I make that flow as easy as possible also you might have sales taxes involved in this as well and sales taxes are easiest to do within the system if you're using the sales receipts and invoices to record transactions you can come up with a system where you make deposits and you do it like not using the QuickBooks kind of pre-built-in system and we might talk about that later but sales tax of course muddies the waters a bit as taxes always do so if I go back on over when we enter the normal transactions for customers we're going to hit the dropdown if we're having a system where we're going to be collecting the easiest system we do the bank feeds first and then we just record the income from the bank feeds in that case you'd go into the banking section here and we'd go into the deposits and we would just simply record the deposits that we have in the bank feeds and record them directly to an income account and it would just be like Amazon income or whatever we want to call it coming through and that would be the easiest thing to do and that would be using a deposit form which doesn't give us as much detail for the sub reports but that would be an easy system to do if we had the type of company to do that if we had a cash register kind of system then we probably would be happy to be using the sales receipts and then once the sales receipts are compiled then we're going to deposit them in the grouping that makes sense lining up to the physical deposits we made to the bank or if we have an accrual system we're going to have to enter an invoice and then you can see the next one would be the receive payments and then we're going to go and make the receive payments to a deposit form you can also have an estimate which is kind of like a purchase order in that it doesn't record an actual transaction into the system but what happened before the invoice if we're trying to like bid on a job or give someone an estimate of how much it would cost if they want a particular inventory item or service item now once we enter these transactions then we're typically going to be tracking in what I would call like the customer center which would be on the left hand side under the accounting view under the sales items and this is where up top then you've got everything you've got all of your sales items so then you can kind of close this one you could sort and we'll go into this a little bit more in future presentations and then you've got your invoices obviously if you're on an accrual system it's more complex to track the information for your customers because you're going to try to collect on these outstanding items, estimates payment links, here's your list of customers and then your products and services so then if I check this out just one last thing on the business view switching this over to the business view just to see where these things are located there and if I go back up to the get things done page then we still got our plus button which still gives us the forms which would be the easiest thing to go into and then we're going to track our customers and typically outstanding balance if we have an accrual system if we're using invoices in other words which would be under the get paid and pay area and then up top looking at the get paid area which would be what I would call the customer cycle revenue cycle, sales cycle so here's your customers, estimates invoices, payment links product services now they have that transaction detail in a different location under bookkeeping here so that's where your transactions up top are and if I go to skip this item and I'm going to close this out this is your transactions you have your bank fee tab up top and then you've got your sales transaction so your sales transaction is similar to the expenses thing that we looked at before which allows you to sort kind of the normal transaction types here by by the items that are in your cycle for the revenue cycle or sales cycle so we're going to go into some of those tools a little bit more in future presentations