As a QuickBooks ProAdvisor (see my profile here), I often coach clients on fixing discrepancies in deposits. Today I will be discussing two common mistakes and how to fix them.
Not Receiving Payments
I recently worked with a client – let’s call her Sue – who was puzzled by open invoices. She knows for certain that she had received wire transfers for these invoices and posted the deposits in QuickBooks. The first step to solving this issue is to look at the deposit. Let’s say, for example, that Sue invoiced Cool Cars on 2/1/17 for $2,500 (Figure 1):
We would then look at the deposit that Sue made on 3/1/17 for $2,500 (Figure 2):
I see here that Sue posted a deposit in a manner that did not get applied to the invoice (B). To apply funds to an invoice, we must use the “Select Existing Payments” section (A). There are no payments here for Cool Cars so first we must receive a payment (Figure 3). Go to the client’s open invoice and click “receive payment.” Fill out deposit information and check next the invoice(s) to apply the payment to (C).
Since we chose Checking as the “deposit to” account, there are no further steps needed. However, we do still need to delete the deposit previously posted in Figure 2, otherwise there will be a duplication.
Another common mistake I see is when clients make only periodic deposits, ie: every two weeks, and each deposit contains multiple customer payments. If we receive payment as in Figure 3 above, it may be more difficult to reconcile bank deposits since each payment will show as a separate deposit amount. These receive payments should be posted with the “deposit to” account being “Undeposited Funds.”
Undeposited funds is simply a clearing account to be used when there is a timing difference between when payments are received and when they are deposited to the bank. Let’s say I have received payment from three different customers on March 1st, 5th, and 8th. I record the payments as received on each of those dates.
I think go to the bank on March 10th and deposit all three checks together. In QuickBooks, we add a new deposit, checking next to each payment already recorded that was included in the deposit (Figure 4, see also (A) on Figure 3). We can see here that the deposit total is $2,965 which will match what is shown on my monthly bank statement.
These screen shots were taken using a sample company in QuickBooks Online, so QuickBooks Desktop may look slightly different. If you’d like personalized help with fixing your deposits, please contact me HERE and we can set up a one-on-one meeting. If you have another deposit issue you’d like me to delve into in a future blog, please leave it as a comment below.
Check out my next blog where I discuss common QuickBooks expense mistakes.