QuickBooks Accounts Receivable Summary Report

QuickBooks software training, support, and problem solving
Including strategies and information for a total small business solution

Here are a few reasons why negative amounts appear on your AR report

1. Customer overpaid
2. The payment from the customer was entered into QuickBooks before the invoice or statement charge
3. A credit memo was issued to the customer, but the customer never took advantage of the credit
4. An invoice transaction was never created in QuickBooks
5. A sales receipt transaction was created for the sale, and a receive payment transaction was entered to show the payment.
6. Payment was applied on account to the wrong customer account
7. A receive payment transaction was entered two times on the customer account
8. A receive payment transaction was entered one time and the next step make deposit was inadvertently changed to reflect accounts receivable rather than undeposited funds.

Each of these problems require several steps to make corrections. Over the next few newsletters we will be addressing how to make corrections for each.  In the meantime, you need to identify the source of the problem. 

Step one: Reconcile the customer account in question.

To determine the origin of the credit balance, run a customer balance detail report

Reports > Customers and Receivables Reports >Customer balance detail report>
Modify > Filter > Name  = your customer's name > OK

Analyze this report to determine where the problem lies. Double click on any line on the report  to take you to the original transaction. From the transaction, click on the history button at the top of the window for more information and to jump to the linked payment or invoice.  

Can't reconcile? Have customer payments been applied incorrectly?

Occasionally, you may discover that customer payments  have been applied to the wrong invoices making it difficult to figure out where the problem lies. To help, you can change the 'receive payment' transactions  and uncheck  all the payment applications.  When all the payments have been unapplied, you can rematch invoices with payments correctly. 

Step one:  Uncheck the payment applications.

• From the customer balance detail report drill down on the receive payment transactions in question
• remove the checks next to the invoices
• save and close the transaction
• repeat with all the incorrectly applied receive payment transactions

Step two: Reapply the payments to the correct invoices:

• From the customer balance detail report drill down on the receive payment transactions in question
• Reapply the checks next to the correct invoices
• Did the customer pay an amount less than the total invoice amount?
  • There are many ways to adjust this- here are 3
    • Method 1: To write -off the underpayment: Place a check next to the  invoice being paid and click on the set discount button in the lower left of the screen, enter the amount of the underpayment and for account, use an account named  'customer write-offs', select an account type of expense   OR
    • Method 2: Leave the unpaid amount on the books - place a checkmark next to the invoice being paid and under the payment column enter the amount received on the invoice.  The next time you access this receive payment window, QuickBooks will show the just the balance due amount for this invoice  OR
    • Method 3: Create a credit memo with a full explanation of why the original invoice should be reduced.
• Did the customer pay more than the amount on the invoice?
  • There are many ways to adjust - below we have provided 2 methods
    Either method requires a new item to be set up on your item list
    List menu > Items > control + N (new item) >
    Type = Other charge
    Name the item "AR adjustment" or "accounts receivable adjustment" - leave description blank
    Code the item to account 'customer overpayments (set up a new income account)'
    • Method one: To write-off the overpayment- enter a new invoice (or create a statement charge) (use today's date). Enter the new item, AR adjustment (see above),  for the amount of the overpayment. In the description column of the invoice,  type in the original invoice number that was overpaid and the reason why the customer paid more than the original invoice amount. Save the transaction.  Find the original payment transaction (use the customer balance detail report) and edit the transaction to apply the customer payment to both the original invoice and the adjustment invoice. The report can be accessed as follows:
      Reports > Customer & Receivable > Customer balance detail > double click (drill down) on the customer payment to make changes. Apply the customer check to the original transaction and to this newly created transaction   OR
    • Method two: Increase the original invoice amount.
      Use this method ONLY if the invoice is dated within a period that is not closed. (The prior year is always closed ! - The period is considered closed if financial reports have been prepared by your accountant for any date that includes the date of  the original invoice.)  To increase the amount of the invoice, add a new line item to the invoice and use the new item named AR adjustment  Type an explanation in the description column as to why you believe the customer paid more.

Now that the payments make sense. You will be able to identify any remaining problems such as the ones mentioned in items 1-8 at the beginning of this article..

Look for future newsletters from www.qbalance.com . Each month, we will select one of the problems and provide you with a  solution.

If you would like hands on help making corrections, call or .  Don't spin your wheels, have one of our experts review your file, and work with you to get the problems resolved for the lowest possible cost.  We work with you, based on your desired level of involvement to get good customer balances as of today and train you on the best approaches in QuickBooks for invoicing, tracking receivables, collecting money, and applying customer  payments. On-site at your business or on-line with high speed access we can identify mistakes that have occurred and make the necessary corrections right on your desktop.  We make corrections while you watch and learn.  We help you establish procedures to avoid problems in the future.  An accurate accounts receivable will give you the ability to collect your money faster and with less effort. 

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