and now it's time to learn how to record receiving payments from clients
receiving payments from clients you usually is part of a payment schedule that is negotiated
as part of the contract sometimes the required periodic payments are based on an amount of the
work done and also invoiced as a result that's why it's very important that you record the invoices
as you earn the money the down payment sometimes called a job deposit is a payment in advance of
the work done and we will learn this in the next video in this video we will immediately deposit
all customers checks directly into the bank account we will not use the undeposited funds
feature in QuickBooks you can learn about those things and the supplementary videos that I have
included in the playlists of this course first let's switch on the preference in the Preferences
window to have the money directly deposited into the bank account from the main menu click Edit
preferences then the category of preferences is payments click payments in the left panel then go
to the top right and click company preference you can see use undeposited funds as a default deposit
to account has already been selected click the checkmark to remove the check mark then click OK
now QuickBooks will allow us to record payments directly into the bank account the two reports
that best show the financial relationship between you and your client are the customer balance
detail and the open invoice report the customer balance detail shows the running balance and every
invoice and every payment in date order for each client the running balance is the changing balance
and it will show you the bow at any particular moment in time it's a very good report let's
pin it up in the icon bar from the main menu click reports customers and receivables customer
balance detail notice the Hansen place job has the two invoices and the balance increased after
the second invoice the Mockingbird Lane job had three invoices and noticed the balance increased
after each invoice to pin it up in the icon bar we click view add customer balance detail to the icon
bar then click OK now there's a direct shortcut to the customer balance detail the open invoice
report shows the net amount remaining unapplied any open or unpaid invoices will show up in the
amount unpaid or open and any open or unused payments that have not been applied to invoices
will show up on this report you can think of the open invoice as a summary giving you the net
amount between the invoices and the payments let's open it up and put it in the icon bar from the
main menu click reports customers and receivables open invoice you must make sure the pulldown menu
choice says a for all notice it looks similar to the customer balance detail but it does not have
the running balance column the purpose of this open invoice report is not to show the running
balance it's to show a summary of what invoices remain unpaid and if there are only payments
listed here it should show what payments have not yet been applied let's go ahead and pin it
up in the icon bar view an open invoice - the icon bar click OK now you may say it looks enough like
the customer balance detail and I don't need it it only looks the same right now because we have not
yet received payments once we receive payments the two reports will look very different for example
let's imagine on January 20 we receive cheque number 61 from brown company for the Mockingbird
Lane job and we received $1,000 QuickBooks will automatically apply the payments to the unpaid
invoices in date order most contractors do it this way if the payments are not applied in date
order please watch the supplemental videos about applying customers payments from the main menu
click customers receive payment first we'll put in the date of the payment go forward to January of
2000 uary 20 of 2017 the check number is checked number 61 the customer is brown but the specific
job that we got the check for is the Mockingbird Lane job notice as soon as we choose the correct
job all of the open invoices for that particular job show up here in the panel the payment amount
is a thousand you don't have to type a comma or a decimal point but when you save the field you
should look to the left of your keyboard and push the tab key notice QuickBooks placed a checkmark
on the first row in the margin on the left this is indicating to you that this thousand dollar
payment has been applied to invoice number three invoice number three was $1,350 before we applied
the payment that means that after we save this payment you will still owe or Tom will still owe
brown company for the mockingbirds job for invoice number three but it will only owe the remaining
350 because a thousand dollars has been applied to this invoice after we click Save and close
we can open up the open invoice report notice invoice number three is still open because it's
still showing up on the open invoice report but it no longer says 1350 instead it says only 350
because that's the remaining amount of the invoice that has not yet been paid if we open the customer
balance detail we can see the entire amount of invoice number 3 in its original position and
notice if you look at the bottom of the section of Mockingbird Lane you can see that for the very
first time the Mockingbird Lane balance decreased by $1000 On January 24 the thousand dollar payment
that we just received to understand it properly we should really take a look at a second example
let's imagine on January 23rd we receive checks 66 from brown company for the Mockingbird Lane job
another check for $1,000 the oldest invoice will be paid in full the remainder will be applied to
the next oldest invoice and again if payments are not applied in date order please watch
the supplemental videos about applying customers payments but in our example it will be very easy
from the main menu click customers receive payment now before we continue let's put a shortcut to the
receive payments window right up here in the icon bar view and receive payments to the icon bar and
click OK now we have a convenient shortcut and we don't have to memorize main menu choices the
date of this payment was the 23rd it was checked number 66 and again the client was not only brown
company but specifically for the Mockingbird Lane job here are all the open invoices for that job
notice the original amount of invoice number 3 as well as the remaining amount due we'll put
$1,000 again in the payment field on the left of your keyboard pushed the tab key now notice what
happens QuickBooks has applied 350 out of this thousand to invoice number three thereby paying it
off completely the remaining 650 has been applied to the next oldest invoice invoice number four so
after we click Save and close the open invoice report will not show invoice number three at all
because it is completely paid and on that same open invoice report we will see the difference
between the original amount of invoice number four and the 650 that was applied so the open invoice
report should show two invoices where the top one invoice number four is only two thousand fifty
click Save and close look at the open invoice report invoice number three is gone because it
is completely paid off whereas invoice number four has now been reduced to two thousand fifty