One of the most common issues I discover when cleaning up a new client’s QuickBooks’ account has to do the processes surrounding receiving customers’ payments and depositing them. Whether you accept credit card payments or take physical checks to the bank the amount that will actually hit the bank account is more often than not the sum of multiple customer payments.
For example, you accept one customer check for $100 and another customer check for $200. You take them to the bank together and will see $300 on your bank statement. Alternatively, credit card processors batch all the deposits received on a given day and deposit one lump sum at the end of the day. This amount is often net a processing fee which causes additional bookkeeping problems.
When reviewing a new client’s QuickBooks, it is common to see each individual customer payment recorded in the checking account register. This causes the account reconciliation process to be much more time consuming than if deposits would have been recorded in aggregate.
In order to properly record deposits, you have to create an Other Current Assets account in QuickBooks called Undeposited Funds.
Whether you record customer payments using Sales Receipts or by receiving payment on invoices make sure the “Deposit to” account is set to Undeposited Funds and not to your checking account. An additional step must be undertaken now to move the customer payments from Undeposited Funds to your bank account.