Making Payments Correctly

Learning to use QuickBooks to track your payments may seem a little tricky at first, but it gives you a really clear data trail that can be used to both prevent and detect fraud.   When you set up QuickBooks for automatic use of the Undeposited Funds account each time you enter a payment it is tracked in the Undeposited Funds account. 

One important side-effect of this approach to tracking your revenue is that each payment appears as a separate entry when you do your bank account reconciliation.  If you receive multiple payments your bank statement only shows the total amount deposited.  (This is where the fraud prevention can kick in.  You don't have to wonder if the deposit total matches your payments.)  When you reconcile in QuickBooks the details of each deposit you posted will appear in the Reconcile window.  (Ta-Da!  OK, maybe I'm getting a little overly enthusiastic here.  Sorry. ) 

They key is making sure you record all payments in the Enter Sales Receipts and Receive payments window.   I find the chart below a handy reminder of how to think through the process. 

If this doesn’t make sense to you or your bookkeeper, try spending some time with someone who can answer your questions.  (Yes that could be someone like me!)   Payments are the lifeblood of your business.  Making sure you don’t lose track of them is one of the most cost-effective time investments you can make.