Closing Out QBO Accounts Receivable (Review QBO Sales
QuickBooks Online Accounts Receivable (A/R) should never be closed until your sales system has been closed. Changes in your sales system can result in changes in your QuickBooks Accounts Receivable.
If you’re familiar with the closeout process for your dispatching or job tracking system – such as Housecall Pro, Jobber, and Service Titan – read on! If not, I suggest you follow this link to our written overview about closing your sales system.
DON’T MISS THIS STEP!
Since your dispatch system is closed out, we have confirmed that everything is accurate. However, this doesn’t mean that your accounting software is correct! This step is often overlooked. We want to ensure that there are no duplicated payments., cancelled jobs, tips, or missing payments so that we know QuickBooks is accurate.
DUPLICATED PAYMENTS AND MISSING INVOICES
Firstly, you should look for duplicated payments. Pull an A/R report and look for any large negative numbers. Negative values on your Accounts Receivable could indicate a repeated payment or missing invoice. These negative values will need to be investigated individually by looking at the customer profile in QuickBooks. If it is a duplicate payment, we will see two payments for the same amount under the profile; one should be deposited, and one will not be. The undeposited payment will need to be deleted to clear up this issue. (Always leave the transaction with a banking match alone if possible).
If it is a missing invoice, we will see a payment with no matching invoice (this should have been fixed previously, but we like to double-check). This means we need to go back to our dispatching system and make sure that we push that invoice over to connect with the payment and not show an overpayment.
Your dispatcher, or dispatching system for that matter, should be able to quickly give you a list of cancelled jobs or jobs that were never done. It would be best to ensure that you go through every month and check that none of these canceled jobs got pushed over to QuickBooks. After all, there’s no reason to record this invoice in QuickBooks if it no longer exists. Failing to delete canceled invoices in QuickBooks will inflate your Accounts Receivable – and your tax liability. Sit down with your dispatcher for a few minutes and discuss the Accounts Receivable report with them to ensure that you don’t have any jobs in QuickBooks. If you don’t have a dedicated dispatcher, take the time to review for yourself. Not only will this practice make your A/R easier to follow, but it will also save you time and concern later.
While the tipping feature in any dispatch system is helpful, most don’t properly push over to QuickBooks correctly. Typically, tips pushed from systems like HouseCall Pro and Service Titan will just be recorded in QuickBooks as credits owed back to the customer. If you take tips, your A/R should be checked for smaller negative values. Once you find these, you’ll need to make a journal entry to correct them. Please see this YouTube video, or increase the invoice with a tip line item to adjust for the increase in payment that is improperly showing.
TIME TO COLLECT
After ensuring that there are no negative values on the A/R by recording tips and checking for duplicate payments and missing invoices, you should have an accurate depiction of your A/R. Now you can use this report to create a collections plan:
- Call and resend invoices to the newer debt
- Send demand letters, or submit any older debt to collections if necessary.
- Don’t hesitate to use collections or put liens on property – this is allowed in most municipalities.
Unfortunately, even with the best-laid collection plans, some people will not pay. Therefore, old, unpaid invoices must be written off as bad debt, so they don’t affect your tax liability. Reach out to your accountant, and they can ensure that this is done correctly. Watch this YouTube video to see how to create a journal entry writing off your bad debt if you are a do-it-yourselfer!
Your A/R should be accurate, and you can move on to ensuring all your income is taken care of and deposited correctly. Read our Payroll review blog here!
Ready to learn more?