- Accounting. Do you want to use account numbers & classes?
- Checking. Which accounts should QuickBooks automatically use for tasks like Open the Pay Bills, Open the Make Deposits, and Open the Create Paychecks?
- Finance Charge. Will you be assessing finance charges on late payments from customers? What’s the interest rate, minimum finance charge, and grace period?
- Items & Inventory. Do you want inventory and purchase orders to be active?
- Multiple Currencies. Does your company do business using other currencies? This preference is NOT reversible, it cannot be turned off once it is turn on – be sure that you know this!
- Payments. Can customers pay you online? What methods can they use?
- Payroll & Employees. Will you be processing payroll using QuickBooks?
- Sales & Customers. Do you want to use sales orders? How should QuickBooks handle invoices when there are time and costs that need to be added?
- Reminders. Ask QuickBooks to track critical dates and tasks and remind you of them.
If there is a period of time between when your customers receive your goods or services and when they pay for them, then several things are true:
- You have a balance in Accounts Receivable on your balance sheet that represents how much customers owe you
- You have an invoice process that you follow
- You have granted credit to customers
- You may have some that don’t pay as quickly as you’d like them to
Each invoice you send should have payment terms listed. A payment term is the period of time you expect the invoice to be paid by the customer. Your payment terms should be set by you, not your customers!
Payment terms are always measured from the invoice date and define when the payment should be received. Here are some common payment terms in accounting terminology, and then in English.
Payment is due 30 days from the invoice date.
2/10 Net 30
Payment is due 30 days from the invoice date. If you pay the invoice in 10 days, you can take a 2% discount off the total amount of the invoice as an early pay discount incentive.
Due Upon Receipt
Payment is due immediately
If you use Net 30 or Due Upon Receipt, then you may want to change your terms to get paid faster. When people see Due Upon Receipt, sometimes they translate it into “I can take my time.” A more specific term spelled out such as Net 7 or Net 10 will actually get you your money faster than Due Upon Receipt.
Do you have issues with people paying you late? If so, you might want to set consequences. Consider adding a line on your invoice that provides interest charges if the payment is late. Utility companies do it, and so do many businesses. A common percentage to charge is 1% – 2%, however, some states have laws that limit you to 10% or another percentage.
The wording would be something like this:
“Accounts not paid within __ days of the date of the invoice are subject to a __% monthly finance charge.”
You will also need to make sure your accounting system can automatically compute these fees.
If you have questions about payment terms, your invoicing process, or your accounts receivable, please reach out.
QuickBooks Desktop Series
Rhonda Rosand, CPA and Advanced Certified QuickBooks ProAdvisor
All Courses are FREE!
Courses will be held in the
Community Room at Granite State College
Networking 8:30AM – 9AM
Course 9AM – 11AM
QuickBooks Set Up
Do It Right the 1st Time!
Whether you are starting from scratch or starting over, there is a right way and several wrong ways to set up a QuickBooks file. Learn how to do it right the first time and save yourself the headaches! Topics covered: accounts and items, users and permissions, customers/jobs/vendors, and class tracking.
Retail/Point of Sale
Cash Register to QuickBooks
Regardless if your business is running off a fancy Point of Sale system or a basic cash register, there is a method to entering the fine details. Learn how to get the data from your cash register to QuickBooks. Topics covered: point of sale/retail workflow, Z tapes and end of day reports, sales receipts and invoices, and items & mapping.
Job Costing – Estimates – Reports
Are you a residential or commercial contractor? Are you performing specialty services for your customers? If you answered yes to any of these questions, let us help ensure that you have a handle on your costs and know where you stand. Topics covered: customers/jobs, items and mapping, estimates and invoicing, and job costing reports.
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Positive Pay is a service offered by banks that is designed to reduce fraudulent check-cashing against your account. If you are writing checks on your bank account (as opposed to using ACH transactions), then the positive pay service, which usually has an extra charge, may be beneficial.
When you activate positive pay, you must send a file of checks that you have written to the bank. The bank will not cash those checks against your account unless they match by check number, dollar amount, and account number. Your file may also include the date of the check and sometimes the payee. Some banks are also able to match payee, but not all of them, so be sure to ask about this.
If there is a mismatch among checks presented for payment, the check will be treated as an exception item and your company will be notified. A representative of your company will let the bank know whether to pay or exclude the exception check.
Positive pay helps to deter a couple of types of fraud:
- Checks where someone has changed the amount
- Stolen blank check stock, even if you don’t know about it being stolen
Positive pay is not designed to prevent the type of fraud that occurs when checks are written to a ghost vendor and erroneously approved by management.
If you use positive pay, you should separate the file creation process from the person who actually writes and/or signs the checks. This will give you better internal control.
The main challenge with positive pay is making sure the bank receives the file of checks before they are presented for payment, including any manual checks written. Another issue is the extra cost, although some banks offer this service at no extra charge.
For companies worried about check fraud, consider looking into positive pay with your local bank.