Customer Center: Invoicing and Receiving Payments

The Customer Center: Your A/R Command Post

QuickBooks Online (QBO) organizes every transaction related to money you expect to collect inside the Customer Center (Sales → Customers). Before you can record a single invoice, you need a clean customer record. A complete record includes the customer's legal name, billing and shipping address, primary contact, payment terms (Net 15, Net 30, Due on Receipt, etc.), and sales-tax status. Incomplete records cause posting errors, misapplied payments, and audit headaches — take the time to fill in every field from the start.

Estimates and Invoices

An estimate is a non-posting document. It shows a customer what a job will cost but does not move money through any account. When the customer approves the work, you convert the estimate to an invoice with one click (Estimate → Create Invoice). QBO carries every line item forward so nothing is re-keyed, reducing transcription errors.

An invoice is a posting document. The moment you save it, QBO:

• Debits Accounts Receivable (A/R) for the full amount.
• Credits the appropriate income account (e.g., Services Revenue, Product Sales).
• Calculates and credits Sales Tax Payable if the item is taxable and the customer is taxable.

Always verify the tax code on every line item. Charging tax on a tax-exempt customer — or missing tax on a taxable sale — creates compliance problems that are difficult to unwind.

Once the invoice is saved, you can email it as a PDF directly from QBO (Send → Email). Before you send, confirm the customer's email address and review the message. Sending an invoice to the wrong address is a data-privacy concern as well as a customer-service failure.

Sales Receipts vs. Invoices

Use a sales receipt when the customer pays at the point of sale — no open balance is created. Use an invoice when payment will come later. Mixing these up overstates or understates A/R and makes your aging report unreliable.

Receiving Payments and Undeposited Funds

When a customer pays an open invoice, go to + New → Receive Payment. Select the customer, match the payment to the correct invoice, choose the payment method (check, ACH, credit card, etc.), and set the deposit-to account.

Undeposited Funds is a clearing account — think of it as the physical deposit bag sitting on your desk. QBO uses it to group multiple payments so your bank deposit matches the actual lump-sum deposit on the bank statement. The workflow is:

1. Receive each payment → deposit to Undeposited Funds.

2. When ready to take money to the bank, go to + New → Bank Deposit.

3. Check every payment in the Undeposited Funds list that is in that deposit.

4. Confirm the total matches your physical deposit slip, then save.

After saving the deposit, the Undeposited Funds balance must be $0 for the payments in that batch. A non-zero balance means either a payment was not deposited or an extra payment was posted. Leaving money in Undeposited Funds is one of the most common bookkeeping errors auditors flag — it overstates assets and makes bank reconciliation impossible.

Partial Payments

A customer may send only part of what they owe. Record the exact amount received, apply it to the oldest or agreed invoice, and save. QBO reduces the open invoice balance automatically. The remaining balance stays in A/R and will appear on your aging report as still outstanding. Never write off the remaining balance unless the customer is genuinely not going to pay and management has approved the write-off.

A/R Aging Reports

The A/R Aging Summary groups open balances by how long they have been outstanding: Current, 1–30 days, 31–60 days, 61–90 days, and 91+ days. The Customer Balance Detail lists every open invoice behind the summary numbers.

Run both reports at month-end (or any time you review collections). For every balance in the 31-day-or-older columns:

• Identify the customer and invoice number.
• Write a brief, professional collection-action note (two sentences is standard): what you will do and by when.

Example: "Called [Customer] on [date] re Invoice #1042 ($450, 45 days past due); left voicemail requesting payment by [date]."

Document your collection actions in writing. This protects the business legally and ensures continuity if someone else covers the account.

Accuracy and Data-Privacy Reminders

• Double-check every dollar amount before saving — correcting a posted invoice requires a credit memo or void, both of which leave an audit trail and take extra time.
• Customer financial information (balances, terms, contact details) is confidential. Do not leave QBO open on an unattended screen. Log out when you step away.
• In a training environment, use only simulated data. Never enter real customer information into a trial or practice account.
• There are no physical hazards unique to this task, but ergonomic best practice applies: position your monitor at eye level, take short breaks to prevent eye strain, and keep your workstation organized to avoid misplacing source documents (invoices, remittance advices) needed for matching.

Lab Goal

By the end of this lab your QBO file should show: five complete customer records, one invoice converted from an estimate and emailed, three full payment receipts plus one partial payment all correctly deposited, an Undeposited Funds balance of exactly $0, and A/R Aging and Customer Balance Detail reports that match the answer key with collection-action notes for every overdue balance.