How to Use Accounts Receivable in QuickBooks Online
Managing accounts receivable is a crucial aspect of any business’s financial health. QuickBooks Online is a powerful accounting software that offers a variety of tools to help businesses effectively manage their receivables. In this article, we will guide you through the process of using accounts receivable in QuickBooks Online, ensuring that you can streamline your financial operations and improve your cash flow.
Understanding Accounts Receivable
Before diving into the specifics of using accounts receivable in QuickBooks Online, it’s essential to understand what accounts receivable are. Accounts receivable represent the money that your business is owed by its customers for goods or services provided on credit. By keeping track of these receivables, you can monitor your cash flow and ensure that your business remains financially stable.
Setting Up Accounts Receivable
To begin using accounts receivable in QuickBooks Online, you need to set up your accounts receivable settings. Here’s how to do it:
1. Log in to your QuickBooks Online account.
2. Click on the gear icon in the upper-right corner to access the Settings menu.
3. Select “Accounts and Settings” from the menu.
4. Go to the “Company” tab.
5. Click on “Accounts and Settings” again.
6. In the “Chart of Accounts” section, click on “New.”
7. Select “Other Current Asset” from the “Account Type” dropdown menu.
8. Enter a name for your accounts receivable account, such as “Accounts Receivable.”
9. Choose the appropriate account classification and tax code.
10. Click “Save and Close” to create the account.
Recording Sales Invoices
Once your accounts receivable account is set up, you can start recording sales invoices. Here’s how to do it:
1. Click on the “Sales” tab in the left-hand menu.
2. Select “Create Invoices” from the menu.
3. Enter the customer’s information, including their name, contact details, and billing address.
4. Enter the invoice date, due date, and payment terms.
5. Add the products or services you’re invoicing for, along with their quantities and prices.
6. Click “Save and Close” to create the invoice.
Tracking Payments
After you’ve sent out invoices, it’s crucial to keep track of payments received. QuickBooks Online makes it easy to record and manage payments:
1. Click on the “Receive Payments” button on the home page or the “Sales” tab.
2. Select the customer who made the payment.
3. Enter the payment amount and the payment method.
4. If you’re applying the payment to a specific invoice, select the invoice from the dropdown menu.
5. Click “Save and Close” to record the payment.
Generating Reports
QuickBooks Online provides various reports to help you analyze your accounts receivable. Here are some useful reports:
1. Aging Summary: This report shows you how much is owed by each customer, categorized by the number of days past due.
2. Sales by Customer: This report provides a breakdown of sales made to each customer, helping you identify your top performers.
3. Accounts Receivable Aging Detail: This report offers a detailed view of each customer’s account, including outstanding invoices and payment history.
Conclusion
Using accounts receivable in QuickBooks Online is a straightforward process that can help your business manage its finances more effectively. By setting up your accounts, recording sales invoices, tracking payments, and generating reports, you can ensure that your business remains financially stable and improves its cash flow. With QuickBooks Online, managing your accounts receivable has never been easier.
