I've been struggling with a Returned Payment and this video just resolved it! I actually understood the whole process and the logic behind it. Great explanation you just won a subscriber Seth!
This is super helpful! I'm working on a cleanup that has WAY too many items, many of them repetitive, WAY too many accounts in COA, etc. and one of the things I needed clarified in my mind was how to instruct this client to record returned items without duplicating income. Clarity achieved! Thank you!🥰
I'm with you, Seth, using JEs only when truly the best method for a specific reason. This has been an activity which has frustrated me for years in QBO as none of the methods taught have worked or they've been so convoluted it's ridiculous. I've marked this video as one of my favorites in my Support folder. You really saved the day for me with this one. Thank you!!! 🤠
Thank you for this video! Do you have a video showing what to do when the customer is truly a deadbeat and doesn't submit a second payment to cover the returned payment?
@@nerdenterprises I think my question was more about how to handle the returned payment portion of this issue. I shouldn't use the clearing account b/c it will never zero out since the client won't be making another payment. Is that correct?
@@thyrns The quick / easy / dirty way would be to book that returned payment to bad debt expense with a memo explaining you won't be collecting this money. Ultimately, I would want the A/R to show up on the books so I can write it off as bad debt so it tells the right story. So you can still use the clearing account (with the second invoice and the NSF item, but instead of receiving a payment from that customer on that second invoice, you would write off the bad debt with a journal entry: Debit Bad Debt Expense Credit A/R for that client. This is a bit more work, but it's Bulletproof because anyone looking at what you did can clearly see what happened without having to ask too many questions.
What do you mean by "bounced check chargebacks?" In my experience, there are bounced checks, and there are chargebacks which is when someone who paid you issues a chargeback and wins so the credit card company takes the money back.
I think I missed it but please correct me if I'm wrong, Bank Fee Reimbursement product is mapped to Reimbursed Expenses? Reimbursed Expenses is linked to the checking account? Found it -- Reimbursed Expenses to an Income account. (P.S. I'm not an accountant just a bookkeeper trying to learn).
Hey there! If you click over to this post in my blog, you will see all of the screen shots that show you step by step how to map everything. But yes, I like to use Reimbursed expenses as an income account, because you (should) be charging the client more than you were charged by the bank, which means if you map it to the expense account, you will have a negative expense. So this is just cleaner.
Thank you for the video. I followed the steps in the video, and QBO continues to display a "Needs Attention" message next to the original invoice that was returned. Not sure if this message indicates an error in my part, or is there an additional step I need to take? Any suggestions are appreciated. Thank you.
Not sure what I'm missing here....but at the end of this process you are showing $7500 in income on the P&L, but you did not actual receive that income. Doesn't the customer still owe you the money? and do you have a video explaining if there is a different work flow if this payment is via Quickbooks Payments and that is "returned"? In that instance, you get a red glaring reminder on the Sales :Invoice page that I can't get rid of..... thanks for all your help!
The first payment received (the one that was returned) closes out the invoice where the income was booked. The second invoice puts their receivable back on the books so your books show they still owe the money. But the income is still there on the P&L. This is accrual basis, so you've earned the money (regardless if paid or not). It's on the P&L, and it goes back into A/R. As for the QB Payments scenario, that one is a little trickier and I've seen it come up different ways. It is very difficult to get that reminder to go away. I've played with different ways of doing it, but none that I am totally happy with yet.
HELLO thank for yours videos, how can I do in the event that when paying a client, that money is returned to us because the account was incorrect? How can we do it the right way?
Hi! I may not be following your question exactly, but it sounds like the you are on the other side of this? So you paid someone, but the money was sent back to you? If I am right, then you have to kind of flip what I am showing you in this video. If your payment was a payment on a bill, then you have to put that payable back on the books, get the right account info and then pay it again. If it was just a payment booked to an expense, then post the returned payment as a deposit against that expense. Then pay it again and book it to the same expense.
Sorry I missed this. It works kind of the opposite way. When your payment is returned, you want to put it back into your accounts payable balance. The returned payment (deposit) can go against the original expense negating that expense as it should. Then enter a new bill to pay it. That's the easiest / cleanest way.
I noticed that doing it this way may create an issue on the "Sales by Customer" report. That report seems to show more sales for this particular customer even though the balance sheet and profit/loss are correct. Is there a way to correct that or is this just a reporting issue with this particular sales report?
The sales by customer report shows all sales receipts and invoices regardless of whether they are for actual revenues or not. It does not include revenues booked other ways. So in general it's not a reliable report. You're better off running a profit and loss, clicking into total income and grouping that by customer. It's not as pretty but it's much more accurate.
@@nerdenterprises thanks for confirming, makes sense! I really only noticed this since my dashboard shows total sales and I notice that figure was off. It seems like the dashboard pulls from the “unreliable” sales report unfortunately.
Why can't you do a simple Journal entry to Dr A/Receivable and Credit Bank with the amount of the Returned Cheque. I am assuming that when you debit A/R that you would be able to select the Deadbeat Customer.
You can do that, but there are reasons that I explain in the video and the write up why I don't like handling it that way. This is much cleaner (my opinion of course). Then you would still need to bill the customer for the NSF fee. Personally I can't stand seeing "journal entries" in a bank account register.
I've been struggling with a Returned Payment and this video just resolved it! I actually understood the whole process and the logic behind it. Great explanation you just won a subscriber Seth!
@@kopallimedia That's amazing! Thank you 🥰
This is super helpful! I'm working on a cleanup that has WAY too many items, many of them repetitive, WAY too many accounts in COA, etc. and one of the things I needed clarified in my mind was how to instruct this client to record returned items without duplicating income. Clarity achieved! Thank you!🥰
Thank you! I am so glad this was helpful!
I'm with you, Seth, using JEs only when truly the best method for a specific reason. This has been an activity which has frustrated me for years in QBO as none of the methods taught have worked or they've been so convoluted it's ridiculous. I've marked this video as one of my favorites in my Support folder. You really saved the day for me with this one. Thank you!!! 🤠
Thank you! I thought people would find this approach really useful 🤩
Thank you for this video! Do you have a video showing what to do when the customer is truly a deadbeat and doesn't submit a second payment to cover the returned payment?
You can write it off and never work with that customer again, or send them to collections.
@@nerdenterprises I think my question was more about how to handle the returned payment portion of this issue. I shouldn't use the clearing account b/c it will never zero out since the client won't be making another payment. Is that correct?
@@thyrns The quick / easy / dirty way would be to book that returned payment to bad debt expense with a memo explaining you won't be collecting this money.
Ultimately, I would want the A/R to show up on the books so I can write it off as bad debt so it tells the right story. So you can still use the clearing account (with the second invoice and the NSF item, but instead of receiving a payment from that customer on that second invoice, you would write off the bad debt with a journal entry:
Debit Bad Debt Expense
Credit A/R for that client.
This is a bit more work, but it's Bulletproof because anyone looking at what you did can clearly see what happened without having to ask too many questions.
I'm looking for recording bounced check chargebacks in QBO. Not in the online help, not much in the interwebs either.
What do you mean by "bounced check chargebacks?" In my experience, there are bounced checks, and there are chargebacks which is when someone who paid you issues a chargeback and wins so the credit card company takes the money back.
I think I missed it but please correct me if I'm wrong, Bank Fee Reimbursement product is mapped to Reimbursed Expenses? Reimbursed Expenses is linked to the checking account? Found it -- Reimbursed Expenses to an Income account. (P.S. I'm not an accountant just a bookkeeper trying to learn).
Hey there! If you click over to this post in my blog, you will see all of the screen shots that show you step by step how to map everything.
But yes, I like to use Reimbursed expenses as an income account, because you (should) be charging the client more than you were charged by the bank, which means if you map it to the expense account, you will have a negative expense. So this is just cleaner.
Thank you for your help!
You got it! Thank you for thanking me 😄
Thank you for the video. I followed the steps in the video, and QBO continues to display a "Needs Attention" message next to the original invoice that was returned. Not sure if this message indicates an error in my part, or is there an additional step I need to take? Any suggestions are appreciated. Thank you.
Hey, I’m experiencing this issue as well. Would you able to fix this or is there any steps I need to do or I’ll just leave it there like that?
Not sure what I'm missing here....but at the end of this process you are showing $7500 in income on the P&L, but you did not actual receive that income. Doesn't the customer still owe you the money?
and
do you have a video explaining if there is a different work flow if this payment is via Quickbooks Payments and that is "returned"? In that instance, you get a red glaring reminder on the Sales :Invoice page that I can't get rid of.....
thanks for all your help!
The first payment received (the one that was returned) closes out the invoice where the income was booked.
The second invoice puts their receivable back on the books so your books show they still owe the money. But the income is still there on the P&L. This is accrual basis, so you've earned the money (regardless if paid or not). It's on the P&L, and it goes back into A/R.
As for the QB Payments scenario, that one is a little trickier and I've seen it come up different ways. It is very difficult to get that reminder to go away. I've played with different ways of doing it, but none that I am totally happy with yet.
HELLO thank for yours videos, how can I do in the event that when paying a client, that money is returned to us because the account was incorrect? How can we do it the right way?
Hi! I may not be following your question exactly, but it sounds like the you are on the other side of this? So you paid someone, but the money was sent back to you?
If I am right, then you have to kind of flip what I am showing you in this video.
If your payment was a payment on a bill, then you have to put that payable back on the books, get the right account info and then pay it again.
If it was just a payment booked to an expense, then post the returned payment as a deposit against that expense. Then pay it again and book it to the same expense.
Do you have a video if a bill payment check bounced on our end?
Sorry I missed this. It works kind of the opposite way.
When your payment is returned, you want to put it back into your accounts payable balance.
The returned payment (deposit) can go against the original expense negating that expense as it should.
Then enter a new bill to pay it.
That's the easiest / cleanest way.
I noticed that doing it this way may create an issue on the "Sales by Customer" report. That report seems to show more sales for this particular customer even though the balance sheet and profit/loss are correct. Is there a way to correct that or is this just a reporting issue with this particular sales report?
The sales by customer report shows all sales receipts and invoices regardless of whether they are for actual revenues or not. It does not include revenues booked other ways. So in general it's not a reliable report.
You're better off running a profit and loss, clicking into total income and grouping that by customer. It's not as pretty but it's much more accurate.
@@nerdenterprises thanks for confirming, makes sense! I really only noticed this since my dashboard shows total sales and I notice that figure was off. It seems like the dashboard pulls from the “unreliable” sales report unfortunately.
Why can't you do a simple Journal entry to Dr A/Receivable and Credit Bank with the amount of the Returned Cheque. I am assuming that when you debit A/R that you would be able to select the Deadbeat Customer.
You can do that, but there are reasons that I explain in the video and the write up why I don't like handling it that way. This is much cleaner (my opinion of course). Then you would still need to bill the customer for the NSF fee. Personally I can't stand seeing "journal entries" in a bank account register.