Issuing Credit Memos and Refunds in QuickBooks

You’re accustomed to money going in a certain direction, but sometimes you have to pay your customers. Here’s how it’s done.

QuickBooks is very good at helping you get paid by your customers. It comes equipped with customizable invoice templates for billing customers and sales receipts for recording instant sales. It supports online payments, so you can accept debit or credit cards and electronic checks. It simplifies the process of recording payments and it offers reports that let you keep track of it all.

There are times, though, when you have to issue a payment to a customer. QuickBooks provides forms that allow that transfer of funds: credit memos and refunds. Do you know when and how they should be used? Here are the basics.

Credit Memos

A credit memo is just what it sounds like. A customer returns an item for which they’ve already paid, and you have to credit him or her for its cost.  This is the more complicated of the two and requires more bookkeeping, since you’re tracking the sale, its payment, and the return item. You can deal with the amount of the credit by:

  • Retaining the funds in the customer account.
  • Issuing a refund.
  • Applying it to the next open invoice.

When you issue a credit memo to a customer, you have three options for returning the money they paid.

To create a credit memo, click Refunds & Credits on QuickBooks’ home page or open the Customers menu and select Create Credit Memos/Refunds. The Credit Memo window opens. Select the correct Customer:Job. In the line item section of the form, choose the merchandise returned in the Item column and enter a quantity. Repeat the process if more than one item was returned, then click Save & Close. The Available Credit window, pictured above, will open. Click the button in front of the option you want.

Select the first option if that’s what you want and click OK. The window will close, and the customer will have had that credit amount applied to his or her own account. You can see this in the Customer Center if you click on Customers in the navigation toolbar (or Customers | Customer Center). You can then either click on the Customers & Jobs tab and scroll down until you can highlight your customer’s record or click on Transactions | Credit Memos.

Click on Give a Refund to open the Issue a Refund window. Everything should be filled in here except for the payment method. If you select Cash from the Issue this refund via drop-down list and then pick the correct account from the list that opens, the refund amount will be subtracted from the account. Select Check and then the Account, and check the box in front of To be printed. That refund will be in the list the next time you open the File menu, then Print Forms | Checks. Choose a credit card and check the box in front of Process credit card refund when saving box to issue a credit card refund automatically.

Tip: Can’t work with credit cards because you don’t have a merchant account? We can help you set this up.

The Issue a Refund window

If there is an open invoice, the Apply Credit to Invoices window will open, containing a list of unpaid bills. If there isn’t already a checkmark in front of the invoice you want to apply it too, click in the first column to create one. QuickBooks will tell you how much credit was applied and whether any remains. When you’ve checked the screen for accuracy, click Done.

Dealing with Overpayments

Let’s say a customer is catching up on multiple outstanding invoices and he or she sends you a check for the total but overpays you. Open the Receive Payments window by going to Customers | Receive Payments or clicking Receive Payments on the home page. Select the customer and enter the Payment Amount and Check #. QuickBooks will have put a checkmark in front of all the outstanding invoices listed to indicate they’ve been paid.

In the lower left corner, you’ll see a section titled Overpayment. The extra amount and your two options for dealing with it appear here. You can either credit the customer or issue a refund. Click the action you want to take, then save the transaction.

If a customer overpays you, you can use QuickBooks’ built-in tools to credit him or her.

You can also issue refunds through the Write Checks window, but this is a more complicated procedure. It’s easier to process a credit memo.

If you’re at all unclear about what we’ve described here, please contact us for assistance. Refunds or credits that come through incorrectly (or not at all) can make customers very unhappy and may affect future sales. So, let us help you get it right the first time.

Why QuickBooks Should Be on Your Desktop

You know about QuickBooks but you’re still hesitating. Here’s why you should make the transition.

Even if you’re a very small business, you’re at a competitive disadvantage if you’re still doing your accounting manually. You might be doing okay using Microsoft Word for invoices and records and Excel for reports.

But many of your rivals manage their financial data digitally. Some of them likely use QuickBooks; it’s the market leader, and it’s on millions of desktops. Their products and/or services may not be superior to yours, but they have an edge because they’re running their businesses more efficiently. They’re presenting a more modern image to their market and building better customer relationships.

Now is the time to update your accounting system. Here’s what your competition has learned and what you, too, can experience.

How It Helps

There’s never a good time to make the transition to new software. Switching to QuickBooks is going to cut into your productive hours, and it will take some time to learn how it works before you can start using it daily. We can accelerate that process by helping you implement it and training you on its operations.

Once you get going, you’ll discover a whole range of benefits that you may not have even considered, like:

Once you’ve created an item record, for example, QuickBooks stores it for use in transactions.

Minimized errors. Once you’ve entered data in QuickBooks, whether it’s a customer’s address or a product/service price and description, the software stores it. It will appear in lists that you can access when, for example, you’re creating invoices. Not only does this improve accuracy, but it also makes duplicate data entry unnecessary.

Faster payments from customers. QuickBooks supports merchant accounts. Sign up for one, and you’ll be able to accept direct bank transfers and credit/debit cards from customers. You can automatically include a payment stub on invoices to speed up the remittance process.

Real-time account balances. Supply your login information for your online banks and other financial institutions, and QuickBooks can connect to them. It imports cleared transaction data regularly and helps you reconcile your accounts. You can even set it up to pay your bills electronically.

Instant data access. Got a customer on the phone who has a problem with an invoice or payment? QuickBooks’ search tools help you track down the smallest detail in seconds.

Time-tracking. If you (or your employees) provide services that are billed back to customers, you can create time records individually or on a time sheet. These blocks of hours and minutes can be marked billable, so they’ll appear the next time you start an invoice for any affected customers.

If your company sells services, you can create individual time records or comprehensive timesheets and mark sessions as billable.

Improved customer relationships. Your customers want answers when they have problems or questions, and they want them quickly and accurately. QuickBooks lets you store all needed details about customers in records, including contact information, payment particulars, and transaction history. Nothing helps encourage future sales like a company that knows its customers.

A more contemporary image. Those invoices and statements you create in Word—or worse, write by hand—contribute to your customers’ impressions of you and your commitment to using state-of-the-art technology to better serve their needs. When you email professional-looking, carefully-customized sales and purchase forms, you’re likely to go up a notch in their eyes.

Feature flexibility. You can use a little of QuickBooks and still have it be worth your time and technology dollars, or you can stretch its capabilities to the limits. If the latter happens, you may want to expand the software’s reach by integrating it with one of the hundreds of add-ons available in areas like inventory, invoicing and billing, and CRM.

Time and money savings. This is actually the most compelling reason to use QuickBooks. Yes, you have to pay upfront for the software, but you’ll soon see that your investment will reduce the hours you spend on accounting. That means you’ll have more time to do what only you can do: make your business flourish by planning for its future and taking the actions that will move you toward greater success.

Have you installed QuickBooks but you’re having trouble using its features fully? Do you need some guidance, particularly in the area of advanced reports? Contact us. We’ll assess where you are with the software and devise a plan to complete its implementation. You may be surprised to learn what you can do.

Every invoice or statement or receipt you issue reflects on your company’s image. QuickBooks contains templates that you can customize to project a highly professional one.

How QuickBooks Protects Your Data, and How You Can Help

The data in your QuickBooks company file contains some of the most sensitive information on your computer. Make sure it’s secure.

Your customer list is gold. And those Social Security and bank card numbers in your payroll, client, and vendor records need to be protected from intruders and only viewed by authorized employees.

It’s not just large corporations and financial institutions that get hacked. That’s what the bad guys want you to think. In reality, small businesses are often the victims of data breaches because their owners think they’re immune from data theft and destruction.

Even if you’re password-protecting your PCs and running antivirus and anti-malware software, there’s more you need to do when it comes to your accounting records. Here’s what we suggest.

Restrict access by setting up user permissions.

If you have multiple staff members using QuickBooks, don’t share the same user name and password. That obviously gives everyone access to all data and activity. If something goes awry, you have no way of knowing when or how it happened, and who was responsible. To protect yourself and everyone else who logs in, it’s critical that all users have their own unique logins. They should only be allowed to access information and functions that relate to their job duties.

You can restrict QuickBooks users to certain screens and activities.

 

To assign these permission levels, open the Company menu and click on Set Up Users and Passwords, then Set Up Users. This opens the User List window, where you should be identified as the Admin. Click Add User. Enter a user name and password for an employee who needs access (this can be changed later). Check the box in front of Add this user to my QuickBooks license.

Tip: Not sure how many users are allowed under your current license? Click F2 and look in the upper left corner. If you need to add licenses, let us know.

Click Next. The next screen lists three options. You can grant access to all areas or to selected areas. You can also create a login for us as your external accountant, which lets us see everything except sensitive customer data. Select the second option and click Next. You can see in the image above that you can give the employee different levels of responsibility. When you’ve made your choice, click Next. The subsequent nine screens deal with different areas of QuickBooks and their related activities.

Tip: When you need to change your password, which you should do at a minimum every three months, go to Company | Set Up Users and Passwords | Change Your Password.

Save your company file elsewhere.

You should always be backing up your company file to an external storage device (like a CD or thumb drive).  To set this up, open the File menu and select Back Up Company, then Create Local Backup. This window will open:

The Create Backup window

Make sure Local backup is selected, then click the Options button below (not pictured here). Click Browse to see a directory of your PC and select the correct destination. Leave the two boxes below it checked; this will add the backup date/time to the filename and limit the number of backup copies to three.

By default, QuickBooks will remind you to back up your file every fourth time you close your company file; you can change this number if you prefer. Leave the Complete verification option checked and click OK, then Next. Specify when you want to save your backup copy and click Next again. You can schedule regular backups of your company file on the next screen if you’d like. When you’ve completed this screen, click Finish.

You should also consider saving a copy of your company file to the cloud. Intuit offers its own service for this; it costs $9.95/month or $99.95 annually, but it gives you 100 GB of storage space, so you can back up other critical business files, too.  If you can’t swing this financially, at least store your backups to a portable device that you can carry offsite.

Warning: If you already pay for cloud storage from another vendor, don’t assume you can just copy your QuickBooks file to it. Talk to us.

Other Steps

There are other things you can do to protect your QuickBooks data, including:

  • Insist on strong passwords. Yes, it’s a pain to create and remember them, but it’s critical here.
  • Keep everything That includes your operating system and anything else that requires updates.
  • Minimize web browsing on work computers and remind employees about smart email behaviors.

We strongly recommend that you consult with us as you’re setting up any kind of backup system for QuickBooks. The software’s instructions are straightforward, but we don’t want you to do anything that would jeopardize the integrity of your company file.

Get Paid Faster Using QuickBooks

Are your customers slow about paying their invoices? QuickBooks can help accelerate your receivables.

Your company’s cash flow depends largely on how quickly your customers pay the invoices you’ve sent. And if you’re like most small businesses, those checks tend to dribble in close to—and after—the due date. If you operate on a slim margin, this often means that you’re late at paying your own bills.

It’s essential, then, that you do what you can to get incoming revenue moving as quickly as possible. QuickBooks offers numerous ways to help you accomplish that critical goal.

Simplify the Payment Process

The single most effective step you can take to speed up customer remittances is to allow payment by credit card or electronic check. If you’re currently only accepting paper checks, you already know what problems that option can create, like mailing time, trips to the bank, and insufficient funds.

To establish this capability, you’ll have to sign up for a merchant account that will connect your bank to the financial institutions used by your customers. There are fees associated with this, and the initial setup will be unfamiliar to you. We can help with this.

Once you sign up for a merchant account, you’ll be able to accept payments from customers by credit card and bank transfer.

Having a merchant account will accelerate your receivables and improve your company’s cash flow, but it has other benefits, too. For example:

  • Your customers will appreciate the convenience, and may even be more likely to make a purchase.
  • In 2019, customers and prospects expect to be able to pay for items and services electronically. Not allowing this affects their perception of you as a forward-thinking, progressive business.
  • You’ll save time, which translates to money. Instead of chasing payments, you can be working on ways to meet your goals and help your company grow.

Always Know Where You Stand

If you’re conscientious about keeping your records and transactions updated, you’ll always have access to the most current data about your company’s financial status. You’ll be able to answer questions from customers and vendors quickly and accurately, and your daily accounting tasks will be much easier to accomplish.

There’s another benefit, though: reports. One of the five best things about QuickBooks is its ability to create dozens of reports using pre-formatted templates. You only have to choose the one you want to see, and the software will display it using your company’s data. You also have the option to customize these reports extensively, so they contain the exact cross-section of data that you want to see.

QuickBooks contains dozens of templates for pre-formatted reports that you can customize and create very quickly.

You can see in the image above that several of QuickBooks’ reports are focused specifically on the status of your customers’ invoices and payments. We strongly recommend that you run these reports regularly. The more you know about who is behind and by how much, the more targeted your collections efforts will be.

You’ll also notice that there’s a category of reports called Accountant and Taxes. You can certainly create these yourself, but some, like Trial Balance, will be unfamiliar to you. There are others listed under Company & Financial that are quite complex, but quite important. We’d be happy to analyze these for you on a regular basis (monthly or quarterly) and provide insight that will help you make better business decisions.

Remind Late Payers

There are all kinds of reasons why customers pay invoices late. Their bills may have been lost in the mail. They may have ordered so much that they’re confused about which invoices haven’t been paid. And they may just be low on funds.

You can’t do much about the latter reason, but QuickBooks provides a way for you to update customers about their past due payments: statements.

Sometimes, customers just need a full accounting of what they owe in the form of a statement.

It’s not difficult to follow QuickBooks’ customization options for statements, but we’re here to help if you run into difficulties. In fact, we’d be happy to sit down with you and talk about these as well as other options for improving your company’s cash flow. It’s a multi-faceted problem with many solutions; we can go over the options with you. Contact us now to work on making the rest of 2019 more profitable.

How Do You Track Jobs in QuickBooks?

Once you have recorded the items and jobs into QuickBooks, you can start using them in transactions, and eventually track your progress by generating reports.

Let’s say you worked eight hours on website development for your promotion job. You’d open the Employees menu and select Enter Time | Time/Enter Single Activity to open this window:

You can enter individual, billable activities and assign them to jobs.

In the example above, you’re limited to recording one day’s work on a specific SERVICE ITEM. You’d verify the date and select from the drop-down lists to complete the fields for employee NAME, CUSTOMER: JOB, and SERVICE ITEM. You can either use the timer to time the job or enter the number of hours manually in the DURATION box. Click in the Billable box to create a checkmark and add NOTES if you’d like. The CLASS field is optional; talk to us if you’re not familiar with this feature.

If you worked on two separate service items on the same day for that CUSTOMER: JOB, you would create two individual records. You can also enter billable activities directly on a timesheet by clicking Employees | Enter Time | Use Weekly Timesheet. Once you select the employee NAME at the top, any single activity(ies) you created that week will appear as individual records, and vice versa.

Writing a check or using a credit card for a job-related purchase that should be billed to the customer? You’d fill out these forms in QuickBooks like you usually do, making sure that you document the items or services by highlighting the Items tab, select the correct CUSTOMER: JOB, and make a checkmark in the BILLABLE? column.

If you write a check or charge your credit card for purchases that can be billed to a CUSTOMER: JOB, be sure to record it in QuickBooks.

If you’ll be doing some billable driving for your job, you should also be tracking your mileage in QuickBooks. Open the Company menu and select Enter Vehicle Mileage. If you haven’t created a VEHICLE record in QuickBooks, click <Add New> and easily do so. Complete the rest of the fields and save.

Tip: Do you want to see some of your overhead expenses on job costing reports? Create a CUSTOMER: JOB named “Overhead” and assign related costs to it.

Billing the Billables
When the time comes to invoice your customers (Customers | Create Invoices), you’ll see how your careful work in QuickBooks simplifies that task. Open an invoice form and select a CUSTOMER: JOB. If you’ve entered billable items for him or her, this small window will open:

When you create an invoice for a CUSTOMER: JOB who has billable time, mileage, or other expenses, QuickBooks can automatically add them.

If you leave the first option checked and click OK, another window will open that lists all of the expenses you’ve marked as billable to the customer, arranged by type. Click in the first column of each expense you want to include and click OK. Your invoice containing those entries will open. Do any editing necessary, and then save it.

Note: You’ll probably notice two fields in the Choose Billable Time and Costs window that refers to Markup. This is an advanced concept that we can explore with you, should you want to charge customers more for expenses you’ve incurred on their behalf.

Related Reports

QuickBooks contains a wide variety of reports related to your work billing customers for jobs. Click Reports in the navigation pane or Windows menu, then Jobs, Time & Mileage to see what’s available. Choose a date range and click Run to see them appear with your own data.

If you’ve never worked with jobs in QuickBooks, we strongly recommend that you let us help you here. There are a lot of moving parts, and you don’t want to miss out on any of your efforts or expenses that are billable.

How to Add Documents in QuickBooks

Accounting is about more than just numbers. QuickBooks lets you make documents available from within the program itself.

You could call QuickBooks a “green” computer program. It can conserve reams of paper by storing customer and vendor records, for example, emailing transaction forms, and accepting online payments.

Most small businesses are a long way from being “paperless offices,” despite the predictions so many people made when PCs became commonplace. Even though you’re making an effort to be as digital as possible with your accounting files, not everyone else is yet. So you still have to deal with paper.

And you’re probably still consulting paper documents or stored computer files or scanned images that relate to your accounting data. QuickBooks makes it possible to keep this information close at hand, easily accessible from the software itself.

The Doc Center

QuickBooks provides a centralized area for managing the documents you want to keep close at hand. The Doc Center contains tools you’ll need to work with your documents. From here, you can:

  • Add them by locating them in your storage device or scanning them in directly,
  • See their details and add to them,
  • Search for them, and,
  • Either remove or detach them.
Figure 1: You’ll use the tools in the QuickBooks Doc Center to work with the documents you want to have available from within the program.

There are probably times when you have supporting documentation for invoices or customer and item records, for example. In these cases, you can attach those background documents to the related QuickBooks forms.

Easy Operation

It’s not difficult to work with documents in QuickBooks. But if you don’t have much experience working with file attachments or scanning paper forms, we can walk you through the process.

To get started, click on the Docs tab in the left vertical pane or open the Company menu and select Documents | Doc Center. You’ll see a screen that looks like the one pictured above.

Let’s say you have a special price list you often need to consult. Click the Add icon. A window then opens that contains a directory of all of the folders and files on your PC and any external storage areas. Browse to the pricing document you created earlier and double-click it. QuickBooks will return you to the main Doc Center screen, and you’ll see the name of your file and the time added in the first row of the data table there.

Deeper Descriptions

Figure 2: Once you’ve added files to the Doc Center, you can view and add details or open the original document.

Click in the box in front of the file name, and buttons in the lower right of the screen will light up. Click on View Details, and a small window opens. You can enter information in fields here to add a Title, Description, Keywords, and Comments. Click Save & Close when you’re done. Other buttons here let you Open the file or Remove it.

Note: To bring in documents, you can also drag and drop them from Outlook, folders, or your desktop. We can help you learn how to do this.

Scan a Document

You can also scan documents directly from your scanner into QuickBooks. Click Scan. The QuickBooks Scan Manager should open and locate your printer or scanner. After you’ve selected it and your other Scan Options, click the Scan button. If you’ve opted to see a preview, that page will appear for your approval.

Click Done, and you’ll have several options for working with the image. When you’ve finished, click Done Scanning and enter any desired descriptive details. Click OK, and the Doc Center will display again with your new scanned document in the list.

Attach to Forms

Figure 3: Many QuickBooks forms display the Attach File icon.

If you have supporting documentation for an invoice, for example, you can easily make it available from the form itself. Click the Attach File icon and select your file using the Doc Center’s tools. Once you’ve added an attachment to a form, the icon will display the number of documents that are available there.

Your computer’s storage space may be well organized, but you can still waste time trying to hunt down the document you want right when you want it. QuickBooks’ Doc Center can minimize your search time and ensure that important documentation is at hand.

 

How to Apply Finance Charges in QuickBooks

You may hate to have to do it, but assessing finance charges for late payments may improve your overall cash flow.

There are a myriad of ways to bring in customer payments faster and improve your cash flow. You can:

  • Get a merchant account and let customers pay you electronically
  • Offer a discount for early payments
  • Shorten the payment due cycle (21 days instead of 30 days, for example)
  • Be more aggressive about collections

QuickBooks can help you take all of these steps. It also offers a fifth option: assess finance charges for tardy remittances.

Maybe you don’t want to do this because it seems like a less-than-friendly way to treat customers – especially valued ones. But you’re not in the business of lending money, which is what you’re doing when you continue to let your accounts receivable slide. So, here’s how to do add finance charges to your payment policies.

Multiple Issues Involved

Before you can start adding finance charges to tardy payments, you’ll need to let QuickBooks know how you want them handled. Open the Edit menu and select Preferences. Click the Finance Charge tab in the left vertical pane, then the Company Preferences tab in the window that opens. You’ll see something like this:

You’ll need to decide on your QuickBooks Finance Charge settings before you can begin to apply these late fees.

What Annual Interest Rate will you charge? Will there be a Minimum Finance Charge? Do you want to offer a Grace Period? If you’ve never worked with finance charges before, you might be at a loss as to how you should answer these questions. We can talk it through with you if you’d like, and make sure you’re selecting the correct Finance Charge Account. In our example, QuickBooks defaulted to 70100 – Other Income, which may be the best option for you.

The next question may require some research. Some jurisdictions don’t allow you to Assess finance charges on overdue finance charges; you’ll need to find out. If there’s any doubt, make sure that the box in front of that option isn’t checked.

QuickBooks also needs to know on what date it should start calculating finance charges: on the due date or invoice/billed date. Finally, check the box in front of Mark finance charge invoices “To be printed.” QuickBooks doesn’t include finance charges on invoices themselves; it bills them on separate invoices. Check this box if you want the software to print all of them as a batch.

When you’re done here, click OK.

Applying the Charges

By selecting an Assessment Date, you’re telling QuickBooks how many late days should be included in its finance charge calculations.

When you’re ready, open the Customers menu and select Assess Finance Charges. A window like the one in the image above will open.

QuickBooks, of course, performs all of the required calculations in the background. But it must first know what specific date you plan to actually assess the charges so that it can determine the number of late days that should be included. This may not be the current date, so be sure the Assessment Date is correct before proceeding.

All you have to do here is make sure there’s a check mark in front of every finance charge that should be invoiced (they’ll probably already be there, but you should verify this). If you send statements, clear the box in front of Mark Invoices “To be printed.” The finance charges will appear on the next statement.

When you’re satisfied, click Assess Charges.

Dispatching the Charges

Your finance charges have now been recorded in QuickBooks as individual invoices. When it’s time to print, open the File menu and select Print Forms | Invoices. You’ll see your numbered finance charge invoices displayed like this:

You can see your finance charge invoices when you go to print them.

(Of course, if you email invoices, you’d click on File | Send Forms.)

It’s a good idea to notify your customers before you start assessing finance charges. This will give them a chance to catch up, and no one will be surprised to see the extra invoices.

QuickBooks does the hefty lifting as far as calculations are concerned, but it’s very important that you set your finance charges up correctly. Customers will be annoyed by mistakes. And it’s much easier for us to help you get this tool set up right from the start than to have to go in and untangle errors. Let us know if you plan to start assessing finance charges, and we’ll help make it work for you.

How to Use Memorized Transactions in QuickBooks

Tired of repetitive data entry? QuickBooks provides a way to save time and keystrokes when you create some transactions.

We wrote last month about the benefits of having QuickBooks on your desktop. Among those we listed are three that have an impact on every business that uses it. QuickBooks helps you:

  • Save time.
  • Save money.
  • Minimize errors.

There are numerous examples we could use to illustrate how the software accomplishes this. What we want to talk about this month is the use of memorized transactions. These are templates you set up that contain most if not all the information that could be repeated at specified intervals, eliminating the need for you to enter the same repetitive data regularly and reducing the chances that you’ll make a mistake.

You can create these transaction “models” for both sale and purchase transactions. For example, you might have wireless service bills that remain the same every month or vary by just a bit. Or, you have customers who have monthly standing orders for the same products, or services, or subscription fees.

QuickBooks makes it very easy to set up transactions for repetitive use. Here’s how it works. We recommend you use one of QuickBooks’ sample files for this tutorial.

Creating a Template

Let’s start by creating a repeating bill. Click Enter Bills on the home page and complete all the fields that will remain the same every time the bill is created. In our example, we’re paying a utility bill whose Amount Due will change every month, so we’re leaving that blank. When you’re done, click Memorize in the toolbar to open this window:

Once you’ve created a transaction template, you’ll have to complete the fields in this window to memorize it correctly.

The vendor name appears automatically in a field in the upper left. Below that is a list of four options. These have to do with how/if you want to be notified when it’s time to process a memorized transaction. Your choices are:

  • Add to my Reminders List. QuickBooks will display an entry in your Reminders List for each memorized transaction. Not using Reminders? Let us help.
  • Do Not Remind Me. Nothing will be done.
  • Automate Transaction Entry. You would only select this option if nothing but the date of the transaction changes when it recurs. QuickBooks would automatically process and dispatch the transaction.
  • Add to Group. If you have multiple recurring transactions that come due at the same time, you can create Groups and assign transactions to them (more on this later).

On the right side of the window, open the drop-down list in the field next to How Often and select from the options provided. Click the calendar icon to choose the transaction’s Next (Due) Date. If you only want QuickBooks to automate the entry a specific number of times, add that in the field next to Number Remaining. Then enter the Days In Advance To Enter.

Further Explanation Needed

We’d like to expand on two of the concepts discussed here. First, advance notice for transactions. If you’ve selected Add to my Reminders List for any memorized transactions, you need to tell QuickBooks how far in advance your reminders should start to appear. Open the Edit menu and select Preferences, then Reminders.

If you want Reminders for memorized transactions, you’ll need to tell QuickBooks what your Preferences are.

Memorized Transactions Due appears toward the bottom of the Company Preferences list. Click on the appropriate button to indicate whether you want to see a summary or a list in your Reminders (or nothing at all) and how many days in advance the alert should appear.

Also, Groups. As we mentioned earlier, you can combine memorized transactions due at the same time within a group. To create one, go to Lists | Memorized Transaction List. Click the arrow next to Memorized Transaction in the lower left, then click New Group and give it a name. Choose from the options available for notification and click OK.

Now you can add memorized transactions to this Group by right-clicking on it, selecting Edit Memorized Transaction, and clicking in the button next to Add to Group. Click the down area to the right of the field assigned to Group Name and select the one you just created.

You can add memorized transactions to a Group and process them at the same time.

Caution Advised

We’ve explored this QuickBooks feature with you because we wanted you to see one of the ways that the software can save time and minimize errors. There are many others, and we’re always happy to introduce you to more.

The mechanics of creating memorized transactions are fairly simple. But mistakes can be costly in terms of bills that don’t get paid on time (or at all) and items or services that don’t get invoiced. If you’re new to QuickBooks, we certainly suggest you not work with these on your own. Even if you’re a seasoned user, you may want our help setting up memorized transactions for the first time. Let us know if you need assistance with this or any other element of QuickBooks accounting, we’re ready to help.

Tracking Time in QuickBooks, Part 2

We’ll be continuing the two-part series we started last month.

Last month, we learned about getting QuickBooks ready for time-tracking by activating it in Preferences. We also created a record for a service item. This month, we’ll actually use that record in the two ways you’ll be using it in QuickBooks: to pay employees for their hourly work and to bill customers for services.

Recording Employee Hours

There are two ways to enter hours for your employees who provide services to customers and are paid by the hour. The first is to create a work ticket for a single activity. Click Enter Time on the home page, and then Time/Enter Single Activity to open this window:

Single-activity work tickets for employee hours are especially useful

if you need to set a timer.

First, check the date to make sure it displays the day when the work was actually done, not recorded. Click the arrow in the field next to Name and select the employee’s name from the drop-down list that opens, then do the same in the Customer:Job field below. The Service Item field needs to display the name of the service performed by the employee.

If you want to time a period of activity, use the Start, Stop, and Pause buttons under Duration. You can also replace the 0:00 that appears by default with the number of hours and minutes that were worked.

In the middle column, you’ll select the correct Payroll Item from the drop-down list. You can add a new employee if necessary without completing his or her entire record, but be sure to go back and complete it before your next payroll.

Hidden behind the drop-down menu is a field titled WC Code, which stands for Workers’ Compensation Code. It will only appear if you’re using QuickBooks Enhanced Payroll and have that feature turned on.

Tip: If these two fields do not appear, you’ve selected an employee who isn’t timesheet-based.

In the upper right-hand corner, you’ll see a field labeled Billable. Be sure you click in the box to create a checkmark if you’ll be invoicing a customer for the work done.

Save the activity record when you’ve completed it.

Using Timesheets

You can enter employees’ hours directly on a timesheet instead of creating a single activity record.

QuickBooks offers a second option for entering employee hours: timesheets. You’ll notice that there’s a Timesheet icon in the toolbar of the Time/Enter Single Activity window. If you click on it with a completed record open, a new window opens containing a graphical representation of a paper timesheet.

If you enter employee hours in a single activity record, they will appear on a timesheet, and vice versa. There are two advantages to entering hours directly on the timesheet, though. The first is that it’s faster. And secondly, you can click the Copy Last Sheet icon if you’re just going to duplicate an employee’s previous pay period’s hours. If you want to go there straight from the home page, click Enter Time | Use Weekly Timesheet.

Billing Customers for Time

QuickBooks makes it very easy to transfer billable hours worked by employees to the corresponding customers’ invoices. After you’ve entered blocks of time spent on services, open an invoice form and select the customer. This window will open:

Once you’ve entered billable hours worked by an employee, simply open an invoice form and select that customer to open this window.

By default, Select the outstanding billable time and costs to add to this invoice? is checked. When you click OK, a new window opens displaying a grid that contains all of that customer’s billable time. You can Select All or click in front of each entry you want to include. You’ll notice here that there are also tabs on the grid for Expenses, Mileage, and Items that can be billed back to the customer.

If you choose not to carry billable hours over to the invoice at the present time, you can always add them by clicking Add Time/Costs in the invoice’s toolbar.

Questions? We’re always available to help ensure that you’re billing customers for all costs they incur – and to talk about any other element of accounting that affects your cash flow.

 

Tracking Time in QuickBooks, Part 1

Tracking Time in QuickBooks, Part 1

If your company sells services, you can track the time spent providing them in QuickBooks.

When you sell a product to a customer, you know it. It goes away, and your inventory count in QuickBooks is reduced by one. This tracking helps you know what’s selling and what’s not, and it signals when a reorder is due.

If your business provides services to customers, though, you’re selling your employees’ time and skills. There’s no inventory count; you can sell as many hours as you have workers to fill them. Tracking time accurately and comprehensively, though, is as important as knowing how many hard drives or tote bags you’ve sold.

QuickBooks contains tools to help you record the hours employees spend doing work for customers so you can bill them for services rendered. You can also use these same features to enter employee time for payroll purposes. The software offers two options here: single-activity records and timesheets.

Building the Foundation

We’ve discussed QuickBooks’ Preferences many times before. The software was designed to support small businesses with a wide variety of structures and needs, so it needs to be flexible. For that reason, we always recommend that you check in with your “Preference” options before you explore new features.

To get there, open the Edit menu and select Preferences. In the left vertical pane, click on Time & Expenses, then on the Company Preferences tab at the top. Here is a look at the top part of the window that opens:

The Company Preferences window for Time & Expenses displays multiple options.

To make sure that QuickBooks’ time-tracking features are turned on before you start, click the button next to Yes under Do you track time? Specify the First Day of Work Week by opening that drop-down list. If you know that all your time entries will be billable, click in the box in front of that statement.

There are other options in that window; we’ll talk about them next month.

Creating Service Items

Before you can start tracking billable time, you have to create a record for each service offered – just like you would for a physical product. Click the Items & Services icon on the home page or open the Lists menu and select Item List. The window that opens will eventually display a table containing all the items and services you’ve created.

To define a service item, click Item in the lower left corner, then New, to open a window like this:

You can create numerous types of items in QuickBooks; Service is one of them.

Click the down arrow in the field under Type to see your options here. There are many, ranging from Service to Inventory Part to Sales Tax Group. Select Service. In the field under Item Name/Number, enter a word or phrase and/or number that describes the service, and that won’t get confused with another.

If you had already created an item like “New Construction Services” and you wanted “Carpet Installation” to appear as a subitem of it, you’d click in the box in front of Subitem of to create a checkmark, then open the drop-down list below it and select “New Construction Services.”

Ignore the Unit of Measure section. If this designation is important to your business, talk to us about upgrading your version of QuickBooks. Connect with us, too, if the service you’re defining is used in assemblies or is performed by a subcontractor or partner, as these are more advanced situations.

Enter a brief Description in that box and your hourly charge—to the customer—in the field to the right of Rate. Click the down arrow in the field next to Tax Code to select the item’s taxable status.

It’s very important that you get the next field right. QuickBooks wants to know which account in your company’s Chart of Accounts should be assigned to this item. In this case, it would be “Construction Income.” If you’re not yet familiar with the concept of assigning accounts, let’s set up a session to deal with this and other basic knowledge you should have.

When you’re done, click OK.

Next month, we’ll talk about entering time items in records and timesheets.