Should I be Issuing Customers Sales Receipts or Invoices in QuickBooks?

by | Mar 18, 2017 | Bookkeeping 101, Customer Setup & Management, Invoicing & Receivables, QuickBooks for Mac, QuickBooks for Windows, QuickBooks Online

Invoice or Sales Receipt in QuickBooks

Yesterday while consulting with my newest client smile-emoji, the renowned owner of an upscale beauty Salon here in New York City, she asked a question that I was not expecting to hear asked. Meaning, I thought this would be something everyone knew the answer to. I mean, I did give her an answer, you know explained fully, but not before pausing and digesting it. So, I had to poll my Facebook group on this one, as I often do. Lo and behold, a whopping 68% smile-emoji did not know the difference. I was wrong! I know we all have things in different fields of studies that we are not knowledgeable about but as far as the extent of common knowledge, what is and isn’t, do vary. So, in light of finding that out, I have decided to answer this specific question, “Should I be issuing customers sales receipts or Invoices in QuickBooks?” here so that others may be able to find the answer. That’s what I am about here at Step by Step QuickBooks Tutorial!

So, here’s the deal! If you are a business offering goods and/or services on credit to your customers, or allow for partial payments/payment deposits, then you should create and issue your customers Invoices. This will allow you to track your customers balances for Individual Invoices in the accounts receivables ledger, as well as have a comprehensive view of your total outstanding customer receivables. The Invoice connects the sales transactions to accounts receivables; the sales receipt on the other hand, does not.

If you require full payment at time of sale/service, then you should issue your customers Sales Receipts. Sales Receipts do not affect accounts receivables and thus will not allow for the tracking of any customer balances.

Businesses, such as my client’s beauty salon, that operate on a “buy/now pay/now” basis, do not need to Invoice their customers since they will not need to track payments owing to them – there won’t be any. Instead, they should issue sales receipts which is for the total amount of the sale. Thanks to today’s technological advancement, these businesses have the option of using a Point of Sale system, and most can be linked to an accounting software such as Intuit’s QuickBooks, and have the transactions easily downloaded to QuickBooks instead of manually.

So there you have it! Use an Invoice when you need to track customer balances, and a Sales receipt when you do not.

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What is the Difference Between Accounts Receivable and Other Current Asset?

by | Mar 25, 2016 | Bookkeeping 101, Customer Setup & Management, Financial Statements & Reports

Difference between Accounts Receivable & Other Current Asset

Accounts Receivable is a current asset that is only established in the form of Income to be received from a Customer that has been Invoiced. It is the amount a company has a right to collect because it sold goods or services on credit to a customer. In general, when a customer is Invoiced for goods or services you provide them, the total Invoice amount will be shown on both the Income or Profit and Loss Statement, as well as the Balance Sheet.

If a downpayment or deposit was received for the goods or services, the total Invoice amount would still be shown on the Income Statement; however, the deposit would be applied to the Invoice and entered or deposited in the bank account in which it was actually deposited, while the remaining balance that is owing and unpaid would be entered in the Accounts Receivable account. In other words, any monies that a company is owed by a customer, is a receivable.

It is very important for a company to monitor its Accounts Receivable and to immediately follow up with any customer who has not paid as agreed as per the terms of agreement be it 15 days, 30 days, etc. There is an aging of accounts receivable report tool in software such as QuickBooks that will help to monitor each customer’s Accounts Receivable, and as a general rule, the older a Receivable gets, the less likely it will be collected in full.

While Current Assets are cash or cash equivalent, such as Accounts Receivable and Inventory, Other Current Assets are small less significant items on a balance sheet lumped together because they do not include the major current assets, and as such are not important enough to be listed separately. They are not cash or cash equivalents, and represent a limited source of liquidity for a company – for example advances paid to suppliers or employees. Notations are usually available for the breakdown of these minor assets.