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Is your business Successful or Stressful?

I’ve worked with a lot of small businesses, and, it’s true, a certain amount of stress comes with the territory.   Some of us would even swear that sh*t rolls up hill!  I’ve noticed, however, that there are some key differences between those that are successful, and those that are constantly in turmoil.    

Success = Planning  Stress= Flying by the seat of your pants

If you want your business to succeed, you’ve got to plan, period.  

How are you going to get somewhere if you don’t know where you are going? 

  • It doesn’t have to be terribly complicated, but you should have some basic financial projections and a marketing plan.  
  • Of course, you don’t plan just once and then forget about it!  Your business is a living thing – you need to plan for this year, and next year, and next year you need to plan some more.
  • I recommend systemizing it.  Every Quarter, sit down with your plan for maybe an hour how’d it work out?  Where are you going next?


Success = Knowledge  Stress= burying your head in the sand

This is huge! 

  • Educate yourself and become a well-rounded business person.  Every business owner must understand what’s happening financially in their business. 
  • Figure it out in whatever way you need to.  I’ve known some high-level successful business owners who had what I thought were odd ways of evaluating their finances.  But it worked for them. 
  • Not everyone is good at everything, maybe finances aren’t your thing.   Figure out a way to keep on top of it that doesn’t send you running for cover. 
  • Make sure you have a good bookkeeper and CPA and have them educate you on the important issues for your particular business and force yourself to review these indicators every month and/or quarter.  Same thing with marketing and internal processes. 
  • No Excuses!  There are blogs, books, videos, webinars and classes.  Do something every month!


Success=Getting Help   Stress=Doing it all on your own

Some people would call a lot of entrepreneurs control freaks and workaholics.  It’s easier if we just do it all ourselves.  What normally happens then is that a lot of stuff just doesn’t get done.

  • Think logically.  Where is your time best spent?  Answering phone calls, cleaning the office, bookkeeping?  Probably not.  If you pay someone $25 an hour to clean the office and your time is worth $75, it’s a no-brainer
  • Don’t try to do things you aren’t good at.  People hire you because you are the best, hire others to fill in your weak spots. 

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Cash vs. Accrual Based Accounting…. What does it mean to the Small Business Owner?

In my opinion, one of QuickBooks’ best features is its ability to run financial reports, like a  Profit and Loss, on both a Cash and Accrual Basis.  But  I am often asked by my clients “What does that mean?  What is Cash vs. Accrual?”.   I’ll try to answer that question here on a level that applies to the Small Business Owner evaluating his or her Profit and Loss Report and Balance Sheet.  I’ll  try to leave out the  accountant-speak and technicalities.

Your Profit and Loss Report  is a snapshot of your business’ income and expenses for  a specified period of time. Your Balance Sheet  report  is basically a report of what you own, what you owe, and your business’ Equity (the difference between what you own and what you owe) as of a certain date.  

Let’s talk about Accrual basis first. 


When you are looking at your Profit and Loss report on an Accrual basis,

  • Your income will include everything you billed customers for during that time period, whether or not you have been paid by those customers. 
  • Your expenses will include bills from vendors that you have entered into QuickBooks for a that time period, whether you have paid the bills or not.  


On an Accrual Basis, the Balance Sheet report will include:

  • What is owed to you (customer invoices, called Accounts Receivable)
  • And what you owe (outstanding bills to your vendors, called Accounts Payable). 


 In order to achieve good Accrual-based reports in QuickBooks, you need to use the Customer Invoicing and Enter/Pay Bills features.  It’s also a good idea to pay attention to the dates you bill your customers and bills you enter from your vendors, to be sure they are posted in the period they were incurred. 

Most small businesses file their taxes on a Cash Basis, so why would you want to evaluate your finances on an Accrual basis?  I ALWAYS recommend evaluating your business’ financial performance on an accrual basis at least monthly, because what you have collected from your Customers and what bills you have paid aren’t necessarily indicitive of your business’ earnings performance. 

Let’s look at a professional services business like mine, for instance.  First of all, we bill many of our clients on an hourly basis, so I make sure to bill out as much time as possible on the last day of the month.  That way, when I run our Profit and Loss Statement, I can see what we earned that month, not necessarily what we collected, but what we earned. 

 Like any business should, we know what we need to earn every month to break even.  I may have cash in the bank because I haven’t paid all the bills yet, or because I collected on some old invoices from customers, but that doesn’t necessarily mean that our business has performed as it should. 

Income is the largest consideration in our business, but it holds true with expenses as well.  Expenses should be entered into QuickBooks as Bills for the date they are incurred.  That way your Accrual-based Net Income (Income less Expenses) for the period you are evaluating is a true indicator of your performance for that time period.  Did you spend more than you earned for that period?  If so, it may take a month or two to catch up to you, and you want to be prepared.  Are you showing consistent earnings yet your cash flow is suffering?  You may have an issue with collecting on outstanding invoices from customers.

So what good are Cash basis reports?  For one thing, many businesses file their taxes on a Cash basis, so you want to keep on top of what your income is going to look like for tax purposes.   Cash basis reports are also more closely tied to your business’ cash flow.   When you look at a Profit and Loss Report on  a Cash basis, you are only going to see Income from customers that you have actually received in your hot little hands.  You will only see expenses for things that you have actually paid.   If your business operates on a cash basis – meaning you pay for your business expenses as you incurr them and collect money from your customers on the spot, your Cash basis and Accrual basis reports will be the same.    

In QuickBooks, you can easily run Cash and Accrual Based Financial Reports, click here for a quick interactive video lesson:     Switch from Cash to Accrual Basis Report in QuickBooks

Even with this information, financial reports can be confusing!   The larger the business, the more complex the financial evaluation should be.   There are many other aspects of your finances you need to evaluate, like the return on investment of your assets.  Your industry may also require special attention to one or more aspects of your financial situation.   Intelligent, competent, business professionals sometimes feel uncomfortable asking for assistance evaluating their finances.  Don’t feel like you should know this stuff instinctively!  Just like anything, it takes patience, practice and often professional help to understand.    There are, of course, many books on the subject, as well as the occasional seminar.  Don’t be afraid to seek assistance from your bookkeeper (they may know more than you think, but you just never asked!), your CPA,  or  a business coach.

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If you email documents from QuickBooks, use on line banking or run payroll in QuickBooks you will need to upgrade your software to at least the 2008 version, which for most means 2010. If not, you can continue to use 2007, but keep in mind that Intuit will stop issuing maintenance releases. Maintenance releases are different than program upgrades, maintenance releases “fix” program glitches and keep the program updated to work with the latest operating systems and other programs. Folks used to be able to use QuickBooks well past the sunset date, but the use of email and on line banking have made upgrading a necessity for most people.

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Contractors: Can you save money on Work Comp Insurance?

If you are a general or specialty contractor, you may be able to save money on your Worker’s Compensation insurance just by making sure you are reporting your employee’s wages under the appropriate classification.
Some examples are:

If you are a General Contractor whose employees perform a wide variety of work, you can break down their gross wages and report them by different classifications. Carpentry and roofing work premiums are much higher than painting and concrete work. If your employees break down the time spent on different classified tasks on their time cards, you may report their wages under a variety of classifications. There is a catch ‐ it is now REQUIRED when reporting this way that you have time cards with a time in and a time out for each type of work performed. If you do not have this documentation, in an audit you will be assessed at the highest rated classification and billed for the difference.

If you are a Specialty Contractor – be sure you are reporting your wages in the appropriate classification. One of our clients is a Solar Power contractor who saved significant premiums by investigating what classifications were appropriate for his type of work and changing his reporting classifications.

If you are a Corporation, you may exclude the payroll of Corporate Officer’s from your premiums. For all types of Contractors ‐ Evaluate the true cost of your labor source. Worker’s Compensation premiums are based upon the hourly rates paid to your employees and very by classification. If you are hiring lower‐skilled and lower‐paid employees to save money, you may end up paying them as much or
more as more experienced employees due to the difference in your Worker’s Comp premiums. It is a
good exercise to review the cost of all of your employee’s base wages plus the premium. Many
contractors actually pay their employees a little more in order to surpass this threshold. If this is the
case – be careful to review the hourly rate cut off when your policy renews. Often, the WCIRB
(Worker’s Compensation Insurance Rating Bureau) will raise the hourly rate for the lower
premium. You could end up with a large audit premium if you do not give your employees a raise or
report their wages under the right class code.  There have been many cases where the hourly rate threshold changed and went unnoticed.  Check your thresholds on your policy renewal statement every year!

Many people think that State Fund is the bad guy in making determinations regarding class codes, but
they are actually following the rules of the Worker’s Compensation Insurance Rating Bureau. The
WCIRB is not a government entity. It is a private, nonprofit association, and no state money is used to
fund its operations. To learn more about the WCIRB as well as how and why Worker’s Compensation
rates are determined visit:
To view a detailed listing and description of all classifications visit:

In any case, it is important to keep accurate, auditable, records of your payroll in order to ensure you
are not over‐paying for worker’s compensation insurance. QuickBooks does a great job tracking your
liability and report your wages efficiently and accurately. Any recent version includes a complete
Worker’s Compensation module that has streamlined the process completely. ( you must have the
Enhanced Payroll Subscription to access this module).

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Resolving Unapplied Payments and the Significance

One issue that many people – including bookkeepers – are not aware of is the way unapplied payments and credits in QuickBooks can affect your Financial Statements. I am talking about payments you have received from customers that were “received” in QuickBooks by using the received payments window, but not applied to an invoice during this process, or credit memos prepared but never applied to an invoice.

It is important to know that unapplied customer payments and credits will not show up as Income on your Cash-Basis Profit and Loss report. Even if you have created an invoice and received a payment, if the payment is not applied, your Income will be under-stated!

This could have some serious consequences if you bring your Profit and Loss report to your tax professional and ask them to estimate your income taxes for the year so far and you have a $30,000 customer payment that is not showing up as income.  This ACTUALLY happened to one of my clients! 

How could this happen? Normally, a customer payment will apply automatically to any outstanding invoices in the received payment screen. However if you create the invoice after you receive the payment, or for some reason void the original and re-create it, the payment often will not be applied. When you are receiving payments, it is also important to be sure that a check-mark appears next to the invoice you want to apply it to.  

A quick way to find out if you have any unapplied payments is to run a report called “Open Invoices” under Reports – Customers and Receivables. If you see any negative numbers on this report you have payments or credits that are not applied as in this example:

 Fortunately, this potentially disastrous situation is easily reconciled:

Method 1:  From this report you can drill down by double clicking on the negative number (if it is a payment) and once the received payment window pulls up, you can put a check mark next to the invoice you would like to now apply it to, save and close – you’re done.

If it is a credit memo, or you have a whole list of credits to apply to one invoice simply open the “received payments” window and type in the customer name, but leave the received amount as $0. Click on the “Discounts and Credits” button in the lower left hand corner and apply the out-standing payments or credits that appear in the “credits” tab. Save and close.

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It is also  important that your payments are not dated prior to your invoices, so be sure to avoid this during your regular processing.

If you receive deposits, be sure to follow a procedure that does not leave unapplied payments in your system. (see my blog article Handling Customer Payments in QuickBooks).

 On the Accounts Payable side, you have a similar issue, where you do not want to have Bill “payments” made to your vendors that are not applied to a vendor Bill.

Here you want to print out a “Vendor Balance Detail” from the Reports menu – Vendors & Payables. You can apply payments to bills through the “Pay Bills” by check-marking the bill and using the “set credits” in the lower left-hand section. I often find that there is no bill and one will need to be created – just be sure to date it on or before the payment date.

Unapplied payments are more common in pre-2006 versions because the system did not offer as many prompts for applying payments and credits as the more recent versions.

A quick way to find out if you have unapplied payments or credits in your Accounts Payable or Accounts Receivable system is to run a Balance Sheet report on a Cash Basis. If you see negative numbers in the Accounts Payable or Accounts Receivable here, you you have a problem.

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Progress Billing Solution for Sub-Contractors and Lump Sum Draws.

QuickBooks™ Premier Contractor Edition offers many options for invoicing and includes a pretty flexible Progress Invoicing feature. However, the Progress invoicing feature is definitely geared more toward line-item billing for General Contractors.

Specialty and many General Contractors run up against a customer billing issue when attempting to properly utilize detailed job-costing with QuickBooks™ Progress invoicing.  To get good Estimate vs. Actual Job costing, the Estimate will need to be entered in detailed format with estimated labor, material, subcontractor and other costs. The issue arises when the Contractor is billing the Customer in a Lump Sum Draw schedule rather than by line item. Most often a Contractor in this situation would prefer to display on the invoice the Progress detail provided by QuickBooks™ progress invoicing such as the original contract amount as one lump sum, the current amount billing, and the previous amounts or percentage billed. However, they do not want to show several line item amounts like Labor, materials, etc. as detailed on the Estimate.

Because the Progress invoice pulls it’s data directly from the Estimate, there is a conflict. One solution is to create a custom Progress Invoice template that eliminates all columns except for the Description and manually typing in the detail, such as 20% Draw, etc. The disadvantage is of course is that you have eliminated one of the best features of Progress Billing, created manual entry, and the invoice just doesn’t look as professional.

Another solution, more preferable in my opinion, is to create Group Items that include your detailed job-costing items yet allow you to create a separate description. When you use this item on your Customer’s Estimate, you will retain the Item’s Job-costing and Revenue reporting, yet the Invoice created from the Estimate will Group the items together on one line with one amount. The main issue with this scenario is that it seems like you will need to set up a new group item for every group of items you use.

For instance if you always use the same combination of items, like Labor, Materials, Subcontractor, you will set up a group item that consists of these items.  For more complicated re-models that include many different items for every job, how does this work?  One of the best things about using Group items is the ability to add and subtract items in the group “on the fly”.  Meaning,  while you are creating the estimate, you can insert and delete the items in the group.

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This is an amazing feature and quite transformative for those who do lump sum billing and job costing.

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Perfect Payroll Option for Job-Costing in QuickBooks – Assisted Payroll

Many businesses prefer to use an outside payroll service for the peace of mind provided by someone else taking responsibility for the Payroll Reports and Tax Payments.  

Many employers are more comfortable with this arrangement. I have personally known a few Employers who have gotten burned because the person responsible for paying the payroll taxes and filing the reports did not do the job.  Unfortunately, the employer is ulitmately responsible.  In some cases, these surprised employers owed  a considerable amount of penalties and interest, in additon to liabilities they thought were paid! 

For instance, last November I was hired by a General Contractor named Jonathan.  His well-paid bookkeeper just stopped showing up, and he needed help.  I discovered that not only had she not entered all of his banking transactions or reconciled his bank account for the entire year, but she had not paid his payroll taxes for 3 months, or filed his quarterly reports.   Jonathan knew something was up, but he really had no idea that his payroll taxes were so far behind.

In a more dramatic instance,  Patrick, an Electrical Contractor, came to me with an even worse situation.  His bookkeeper had provided his employees with incorrect W-2’s, which we discovered while unraveling the disasterous bookkeeping.  One of his employees ended up owing the IRS hundreds of dollars, and Patrick owed thousands.  This employer really thought his bookkeeper was “taking care of everything”.  What a nightmare!

If you know a payroll service is handling the taxes and reports, you can avoid a situation like this.  For Contractors and other Professionals who use Job-costing,  it is not always the easiest choice.  

QuickBooks integrated payroll is the best way to extract comprehensive job-costing information.  Extrapolating job-costing information from outside payroll services reports accurately is difficult at best and impossible without sophisticated spreadsheets for every job.  

Fortunately, QuickBooks does offer a solution called QuickBooks Assisted Payroll.   With this solution, Payroll is processed inside of QuickBooks and after each processing is sent electronically to QuickBooks Payroll Service, who takes care of remitting the payroll taxes and filing the reports.  The cost is pretty reasonable, in the range of $50-$75/mo.   You print your own paychecks or use direct deposit, so you no longer have to wait for that FedEx package.  


If you are considering switching payroll services, before the first payroll of the year is the best time.

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Job Costing: The Key to Unlocking your Estimating Genius

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For years, Bookkeepers and Contractors have been utilizing QuickBooks™ to do effective job-costing. Intuit now offers a Premier Version of their software customized for Contractors. I have been asked by many businesses if this version is worth the extra cost. Having used both versions extensively myself, I would answer definitely yes if only for the reports offered exclusively in this version. Having said this, Contractors Edition or no, job-costing in QuickBooks™ is not without its pitfalls. The number one issue you must be aware of is that the fantastic jobcosting reports offered in QuickBooks™ are possible only through the use of Items. If you are a contractor, all job-related costs and income should be entered into your system using Items. It is critical that the Items be set up properly as a two-sided item allowing mapping to the appropriate Income and Cost of Goods Sold accounts. It is also important to realize that each item can only be mapped to one COGS or Income account. In order to get good job-costing reports every Vendor Bill, check written, and even petty cash expenses must be entered into the system under the Item rather than the Expense tab of the transaction screen. Invoices must be created using items for all income. Because the Deposit, Journal Entry and Direct Register screens do not allow for use of items, all job-related income or expenses must be entered through Transactions. This sometimes takes a little creative thinking. I always recommend hiring a professional and experienced consultant to set up your new company and set up some type of support and review process. Next QuickBooks™corner I will address Job-Costing and Payroll. Tip: If you occasionally pay for items with cash – capture these in a bank account called “Petty Cash”. Fund this account with Owner’s equity in small increments.

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How to Hire a Bookkeeper and Accounting Control Tools for the Small Business Owner

We have all heard more “bad” bookkeeper stories than we can bear. One reason for this is that many small business owners are not intimately familiar with accounting concepts or QuickBooks software. Too often, business owners discover a problem in their accounting much too late.

Before you Hire a bookkeeper:

  1. Do not hesitate to check references – make the calls. Trust references that are reputable, local companies that you have heard of.
  2. If you are hiring an independent bookkeeper to work with QuickBooks, be sure they are a QuickBooks Pro-Advisor. This demonstrates that they take their profession seriously and have passed the Intuit testing in order to earn the certification. Be sure to verify their certification by visiting the QuickBooks ProAdvisor referral web site: you can also access a free bookkeeper test on my web site: www.

Once you have hired a bookkeeper, how can you be sure they know what they are doing? Here are some practical suggestions for keeping an eye on your books:

After you hire someone: My number one suggestion is to have your books reviewed by a CPA or reputable accounting firm regularly. If you have recently hired someone new, do this within 60 days, do not wait until the end of the year.

  1. Trust your instincts. Let’s face it, usually there seems to be a lot less money left over than we think there should be – but once we carefully scan the check register or the Income and Expenses, we can usually get a good idea of where the money went. However, if something really seems off, follow up on it with suggestion number immediately. In addition to preventing fraud or disaster, I have had owners correct my mistakes a thousand times. Instinctively, you know where things should be, and your input helps us bookkeepers do our job better.
  2. Set up reasonable controls. NEVER grant check signing authority to your bookkeeper. ALWAYS review all bank and credit card statements, look at every transaction.  Make sure your bank sends copies of the checks back with your statement and review them all.  Also double check the vendor bills and statements for checks that you sign.  If you use on line bill-pay, have your bookkeeper give you all the bills that he or she has scheduled to pay on line.  Review the bill pay section on line every week to see which bills have been paid or are scheduled for payment.  If possible, have different people in your office process incoming payments, payroll and payables.

In addition, get familiar with QuickBooks:

  1. Open up and Look at your check register – scroll back through to the previous month’s transactions. Most of them should have a black check mark in the “cleared” box. This means that your bank account has been reconciled in QuickBooks recently. If it is early in the month, scroll back to the month prior. If you do not see a black check mark next to transactions in the last 60 days, it may indicate that your bank account has not been reconciled. It is extremely important that your account be reconciled promptly every month! Your bookkeeper can also print the check register for you. Never accept a checking account “not balancing”, any significant difference should be resolved – not “adjusted”.
  2. Look at your Financial Reports:  From the  Reports menu: Company and Financial : Look at your Profit and Loss report. Does it make sense? If there is a net profit, can you account for that money? It should either be in your bank account, or you should be able to account for it in Owner Draws, Principle amount of Loan payments, or large purchases. There should not be any negative numbers on the Profit and Loss Report.
  3. From the  Reports menu: Company and Financial: Run a Balance Sheet report run it on a Cash basis ( see my blog article with free tutorial Cash vs. Accrual Accounting). Do not underestimate the importance of the Balance Sheet. I know this report is very intimidating and is difficult to make sense of, but there are some things going on here than are critical to your accounting. Here are just  a few things to look for:a. There should be VERY few NEGATIVE numbers on this report – they should be Accumulated Depreciation and possibly any Equity Accounts (Equity accounts are at the bottom of the report like Owner’s Capital and Owner’s Draws). Be especially concerned about a Negative Balance in accounts like Accounts Payable, Accounts Receivable, and ANY balance in Undeposited funds .b. If there is an account called “Opening Balance Equity” and it has a balance, you need to see what is in there. The only amounts you should see in there would be from your initial company set up. To see the detail: Go to : Lists- Chart of accounts and double click on the Account called “Opening Balance Equity” to open the register, this report can also be printed by your bookkeeper.
  4. Under Reports: Customers and Receivables – Run the Open Invoices Report. You should not see any negative numbers on this report, except for customers who legitimately have a credit from you on their account. Unapplied payments will understate your income on a cash-based report, which is obviously a problem. (see my blog article Unapplied payments check)
  5. If you use items in Job-costing, open up your item list and double click on an item to open it. The box marked “This service is used in assemblies or is performed by a subcontractor or partner should be checked. The Expense account should be a Cost of Goods Sold Account, and the Income account should be an income
    account. This is the way items should be set up for reimbursable expenses as well.
  6. If you do not pay off your credit card balances every month, there should be positive balances on your Balance sheet that corelate with the balance owed.

Ideally, have your bookkeeper help you learn how to run these reports and set them up as memorized reports for you and show you how to access them. If you do not use the computer, have your bookkeeper run these reports and print them for you on a monthly basis at minimum. Most bookkeepers will be pleased that you are taking an interest and making their job more worthwhile! Review them with your bookkeeper and do not be afraid to ask questions – there are no stupid questions. Ask the same questions over and over if you need to until you understand. Don’t be surprised if a few things need “cleaned up”, as long as it gets done. If you are not able to get satisfactory answers, go back to suggestion number one. Your bookkeeper may even need a little guidance on some of the issues from someone more knowledgeable, and let them know you support them in their education.   There are all skill levels out there and even some really great bookkeepers I’ve met are unfamiliar with some of the issues I describe here. Don’t worry if the bookkeeper seems a little defensive.  He or she may feel you are grilling them or suspicious.  I recommend approaching them from the standpoint of you need their help and you wish to take more responsability for your financial record-keeping.  If you would like to be more independent, pursue training through Seminars, DVD’s, or individual consulting.

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Handling Customer Deposits in QuickBooks

Many businesses who receive deposits from customers are not aware of how to process these payments properly. 

One  mistake I see often is receiving a payment and leaving the payment “unapplied” to anything until some later date when an invoice is created.  This process wreaks havoc with your Accounts Receivable and can have serious consequences under-stating your income if not dealt with later. (See my blog article “Important unapplied payments check”.)  

Here is the best way to deal with customer deposits

1. Create Current Liability Account on your Chart of Accounts called “Customer Deposits Received”.

 2. Create an Item on your Item list – the item type “Other Charge” Called “Deposit Received” and map it to the “Customer Deposits Received” Liability Account.

3. Create the customer’s complete order at the total price they will pay for products or services as an Estimate or Sales Order, entering each line item of products and services they have agreed to purchase at the agreed prices, and enter the final item “Deposit Received” as a negative number.  (*if you do not have any information on the customer’s order, you can create an invoice later, just be sure to credit them for their deposit payment!)

4. Create a Sales Receipt to the customer for the deposit amount, using the “Deposit Received” item this time as a positive number. The Sales Receipt will send the payment to the bank account, or undeposited funds as you specify at the bottom of the Sales Receipt.

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5. It is extremely important to finalize this process with the last step which involves invoicing the customer for the balance upon receipt of the products and services.  When you are ready to collect the balance from the customer – open the “Create Invoices” window. 

6. A window will pop up letting you know the customer has an outstanding Sales Order or Estimate – you must now select the Sales Order or Estimate to create your invoice from. 

7. If the terms or pricing have changed since the original creation, you may make these changes directly on the invoice.  Now create the invoice and you will notice that the deposit from the sales order or estimate will appear and reduce the customer’s current balance due.  The process is now complete

*You may skip the process of creating Sales Orders or Estimates – you simply create a Sales Receipt to the Customer using the Customer Deposit item as I described and then use the same Item on the customer’s invoice as a negative when it is created, and your accounting system will be correct.

 For most businesses, however, I prefer the Sales Order/Estimate method because you have a much better system for tracking out-standing customer orders and deposits.  To keep track of what is going on with your customer orders and deposits, I recommend running the following reports:

1. Sales Orders: Sales – Open Sales orders by Customer,

2. Estimates – Jobs, Time & Mileage – Job Progress Invoices vs. Estimates.

2. To Create a Custom Report for the “Customer Deposits” Account : Reports : Custom Transaction Detail – On the Display tab, be sure you have date range that would encompass your longest customer deposit period, and in the “Total By” menu, choose “Customer”, then click on the “Filters” Tab and filter by Account: choose the “Customer Deposits Received” Liability Account. 

I definitely recommend memorizing this report for future use, just be sure when you pull it up in the future the dates are current!  This process combined with these two reports not only keeps you abreast of pending Sales and Customer Deposits you have received, it keeps your accounting process correct along the way. 

It’s great for order processing because when you create the Sales Order or Estimate with the negative deposit amount, it will be very clear when you invoice the customer in the future that they have made a payment toward these services and the invoice will be created for the correct total.

 On the accounting end, because Sales Orders and Estimates are non-posting, you have not at that time actually posted this negative amount to the Customer Deposits Liability account.  The Sales Receipt will post the customer’s payment to your bank account as well as post the Liability appropriately to the Customer Deposits Liability Account – as it should be.  After all you do owe either goods and services or a refund to this customer.  When the invoice is created, the negative Customer Deposit item will post and cancel out the original liability, now that your obligation has been met. 

The Custom Transaction Detail on the Customer Deposits Liability Account will show the history of that account by customer so that you can see what customer’s deposits are still out-standing and those to whom you owe goods or services. 

Don’t let the long explanation deter you.  The process is actually very simple to follow, and helpful for those who receive deposits from Customers on a regular Basis.