Lesson: Supporting your small business clients
inside each envelope was a crisp, signed check.
Customer and vendor
workflows
The story so far
Craig runs a landscaping business and like any
small business owner, keeping track of his sales and
business expenses is vital to his cash flow.
How can QuickBooks Online help?
QuickBooks Online uses workflows to help manage
transactions throughout the accounting life cycle.
By coaching your clients in workflows from day
one, you are setting them up for success. This saves
you time and effort when it comes to reconciling the
books, producing financial statements, and
preparing for taxes.
Introducing the customer
workflow
QuickBooks Online offers all the features your
clients need to support customer workflows, from
simple service-based businesses to retail sales
through to more complex setups.
Let’s take a look at what a best practice customer
workflow looks like for a simple service-based
client like Craig’s Landscaping.
Introducing the vendor
workflow
Remember that by coaching clients in best practice
workflows from day one, you are setting them up
for success. You are also saving yourself time and
effort when it comes to reconciling the books,
producing financial statements, and preparing for
taxes.
You’ve already seen what a good customer
workflow looks like, but what about the other side
of the coin? What’s the best way to work with
vendors in QuickBooks Online?
For Craig’s landscaping business, there are a
number of different people and companies he needs
to pay: his contractors, utility bills, vendors who
supply materials, and (of course) his trusted
bookkeeper. These tend to be things he is billed for
that he can pay for later.
There are also a number of day-to-day cash
expenses, like making sure he has gas in the truck,
which he pays for on his credit card.   3.
Let’s take a look at what this looks like in a typical
vendor workflow.
ProAdvisor tip
Some clients who use QuickBooks Online Plus
might use purchase orders to order materials on
account from their vendors.
Undeposited Funds
Two envelopes just arrived in Chris’s mailbox and
Great news! Chris is really excited because he has
received payments from Bill and Jennifer.
He’s finally getting paid for his hard work and it’s
going to be a great feeling to see that money in his
QuickBooks Online accounts.
He doesn’t have QuickBooks Payments set up, so
he must manually record the received payments. Do
you think you could lend a hand?
How can QuickBooks Online help?
We’ve seen how important using Undeposited
Funds in the right way is for clients, so don’t be
afraid to make extra sure they understand how to
record payments using an Undeposited Funds
account.
The key message is that by holding payments
received in Undeposited Funds, clients are creating
a single bank deposit for multiple payments, making
it easy for them (and you) to match the bank register
with their bank statement.
About the Undeposited
Funds account
Just to recap, tell your clients to think of the
Undeposited Funds account as an envelope where
they keep their checks until they take them to the
bank.
It’s a necessary step so that the QuickBooks Online
Bank Register matches the deposits on the monthly
bank statement. The best way to see how it works is
to help Chris to record the checks he’s received as
Undeposited Funds.
Chris has the checks from Bill Gallinger and
Jennifer Martin, so these are payments he has
received but not yet deposited in the bank.
The first step is to record them as received
payments in QuickBooks Online. 
Watch the video to see how it’s done. The
individual steps are below for you to follow.
Let’s take the shortcut QuickBooks Online has
provided so we can get this done quickly and
efficiently.
1. Go to the + New button and select Receive
Payment
2. Select the customer from the drop-down. In
this case, it’s for Chris’s first check
from Bill Gallinger
Notice how you see a list of any outstanding
invoices for Bill Gallinger.
Change the payment date to today
4. Select a payment method, in this case it’s
a check
5. Enter a reference number: 1234
6. Make sure the Deposit to account
is Undeposited Funds
Tip: This payment is in response to an
invoice, so we have another step to do,
which is to match the payment to the
invoice.
 7. Check the box next to invoice 1001 to apply
the payment to the invoice. It’s the one for
$1224.69
8. Select Save and new
The next received payment is for Jennifer
Martin, so select her from the customer
drop-down menu.
Once again, the active invoice appears, and
we can select it.
9. Change the payment date to today’s date
10. Select a payment method. In this case, it’s
a check
11. Enter a reference number: 12345
12. Make sure the Deposit to account
is Undeposited Funds
Check the box next to invoice 2 to apply the
payment to the invoice. It’s the one for
$533.13.
13. Select Save and close
Recording a deposit
Now Chris is ready to head to the bank and deposit
the checks.
At this point he’s really excited, because the
payments from Bill and Jennifer are about to hit his
bank account.
However, he needs to update his QuickBooks
Online account too, because those Undeposited
Funds are, well, no longer undeposited—
they’re deposited.
Let’s see how we can help him put that right.
Recording a bank deposit
in QuickBooks Online
The key thing to remember here is that Chris
received two checks that will make up one deposit.
Watch the video to see how it’s done. The
individual steps are below for you to follow.
1. Go to the + New button and look to the right
2. Select Bank Deposit. It’s under the Other
category heading
3. Select Account as Checking account
4. Change the date to today
The two payments Chris has received will
show up under Select Existing Payments.
5. Check the boxes for Bill
Gallinger and Jennifer Martin
Notice how the total amount of the deposit is
the sum of those two checks, and this will be
the deposit shown in the check register.
6. Select Save and close
ProAdvisor tip
Remember, the Undeposited Funds account is a
grouping mechanism and if you just post payments
to the checking account directly, the amounts won’t
match your bank statement if you make deposits at
the bank in a batch.
But deposits take all forms and might include
checks and cash. Even customer payments via credit
card will use Undeposited Funds before they are
deposited (even if they are auto-deposited).
A payment on an invoice that uses Undeposited
Funds cannot be deleted once deposited, until that
payment is removed from the deposit it was linked
to.
Best practice workflows
The story so far
Chris, like a lot of clients, is impressed by the
potential of QuickBooks Online to make accounting
tasks straightforward and efficient, saving him time
so he can get on with making his business a success.
He’s very eager to investigate its potential and
maybe he’s getting a little overconfident. Time to
check in and see how he’s managing his day-to-day
sales and expenses activities in QuickBooks Online.
A quick call later and you’ve spotted what might be
some clues that he could be improvising a little
when recording his sales. 
Time for a catch-up meeting to get to the bottom of
it all.
How can QuickBooks Online help?
QuickBooks Online has many features that can help
you and your clients. Combining QuickBooks
Online features with good workflow habits can save
time and make things really efficient for small
businesses and their accountants! 
You’ve already learned how to use many of the
basic transactions during Introduction to
QuickBooks Online for Accountants, but it’s great
to encourage clients to use these same workflows,
or, to put it more simply, to do things in the right
order and in the right place in QuickBooks Online. 
If you coach clients to get into good habits from the
start, it’ll save them and you time, avoid confusion,
and help everyone get on with business! 
In this lesson, we’ll look at some common client
issues around workflows—and the QuickBooks
Online tools you can use to detect them.
When workflows go bad
QuickBooks Online is a super-flexible product and
there are several workflows that can get something
done. 
Clients can also see the same information from
different angles, (like seeing income from sales
through the lens of the Sales Center) but also see
that income and expense transactions flow through
to financial reports. 
So, what’s the problem?
Sometimes clients do not follow the appropriate
accounting workflows and then things get out of
sync. This in turn reflects incorrect key financial
data on the financial statements, and many times
numbers do not add up when they are trying to
reconcile.
You may sometimes have to unravel a problem and
show them the best way to get something done.
Select the headings to find out more about some The problem
of the most common workflow errors.  During a meeting with Karl you discover that while
he has been entering the bills to record the
The case of the misposted check expenses, the bookkeeper has been using the Check
Chris has received a check from his customer as a screen to create payments to vendors, essentially
prepayment deposit on a wiring job that he will recording the expenses twice in QuickBooks
complete in the future.  Online. 
To record the deposits, he taps the + New button The proper workflow would be to create a bill and
and selects Check in the Vendor column to record then use Pay Bills to record the payments against
the payment.  the bill and close out the accounts payable balance.
By doing this, Chris inadvertently creates a vendor
instead of a customer and assigns Professional Fees
as the category.  Using QuickBooks
The problem
Sometimes clients get confused over terminology in Online tools and reports
QuickBooks Online. We’ll pick this problem up
later and see how it can be identified and resolved, to identify issues
plus look at how Chris can be helped to understand
where he went wrong. In Chris’s case and with other issues regarding
transaction workflows, getting to the root of the
The case of the transaction entered via the bank workflow issue can be tough.
register But help is at hand with some specific QuickBooks
Another client, Stacy, has been using Quicken to Online tools:
manage her personal finances for a while and she
always enters her checks and deposits from the bank  The Transaction Journal
register.   The Audit Log/Voided/Deleted Transaction
She is new to QuickBooks Online and notices that tool
she can open the Bank Register and enter
transactions the same way. Great! Select the tabs in turn. 
She navigates to the Bank Register by tapping
on Accounting, then view register. She is feeling The Transaction Journal report
right at home because it looks almost exactly the The Transaction Journal report shows debits and
same as Quicken. The first transaction she wants to credits for each transaction and provides a more
record is a manual check she wrote to pay her sales focused view of amounts and accounts not visible
tax from the prior month. She adds New Jersey from the transaction itself.
Department of Revenue as a new payee, enters the You can view everything the client has recorded,
amount, and selects New Jersey Department of and even sort it by individual users to see if a
Revenue Payable as the account category.  bookkeeper is creating an error, as in our example
So far so good! Or is it? with Chris from earlier in the lesson.
The problem The Transaction Journal report:
QuickBooks Online is a forms-based accounting
program and transactions should be entered using  Was created for accountants, but anyone
the proper screens to make sure that balances stay familiar with double-entry accounting can
nice and tidy. Let’s head over to the Sales Tax use it for calculations, advanced insight, or
Center and see the impact that this transaction will auditing purposes
have on the books.  Can be used as a tool to identify transactions
Notice that even though Stacy recorded the payment that have gone out of balance
of $62.94 for her July liability balance, QuickBooks  Can assist in identifying suspicious or odd
Online doesn’t recognize the liability as being paid. entries for accounts on other reports
Clients who use the Sales Tax Center must record
all payments from it for the payments to be properly Browse the pic
applied to the sales tax liability balances. 
Audit Log
The case of the uncompleted accounts payable
workflow
The Voided/Deleted Transaction tool helps you to
Another client, Karl, is still getting used to his new spot any transactions that a client may have deleted
workflows in QuickBooks Online and so far, he’s or voided, whether accidentally or on purpose.
loving it.  The tool is a filtered version of the Audit Log and
He’s been struggling, however, to understand the it’s available only to Accountant, users via the
accounts payable workflow. He’s in charge of QuickBooks Online Accountant, Accountant Tools.
entering and categorizing the bills he receives from Browse the pic
his vendors, and his bookkeeper records and prints ProAdvisor tip
the checks that are sent to his vendors.  The Audit Log allows you to filter to necessary
On reviewing his last Profit and Loss statement, he details regarding changes to the QuickBooks Online
noticed that his materials expenses seemed rather file. By searching the Audit Log, you can see when
high.  changes happened—and who made them. The Audit
So what went wrong? Log can be a useful training tool or reference
source. There are a few limitations to be aware of
when printing the Audit Log. On screen, it
highlights in yellow the changes made to a specific
transaction. When printing the log, the highlighting
does not print. Also, only 300 lines will print from
the Audit Log for a particular search criterion. To
print additional lines, you could screenshot the other
lines and print your screenshots.
Access the link for further tips on how to use the
Audit Log
QuickBooks Online Audit Log Does and Doesn't.
Tips on coaching best
practice workflows
Get into the habit of coaching your clients in the
correct workflows. Here are some hints and tips to
start you off.
Select the tabs in turn. 
Sales and Expense Centers
It’s sometimes easier for clients to understand how
things are recorded in QuickBooks Online by
coaching them on how to view and work in the
different centers in the Left Navigation Bar.
The Sales Center is their hub for viewing and
recording their invoices and income from their
customers. The Expense Center is for recording
incoming bills for products and services, and their
payments to vendors. For many small businesses,
this will be all they need to know when they start
out.
Encourage your clients to use the right terminology:
bills come from vendors, and invoices go out to
customers. There’s even a glossary you can send out
to them here.
Keep it simple
Help clients to understand just what they need to do
for the complexity of their business as it’s operating
currently—no more and no less!
It’s easy to overcomplicate things and overload
clients with information that they might never need.
You can add value to your client relationships by
touching base with them regularly and identifying
new QuickBooks Online workflows that they might
need to be taught.
Understand their business and encourage them to
use best practice workflows, but remember and
remind them that, as their ProAdvisor, you’re their
go-to expert in QuickBooks Online and there to
help their business thrive via the benefits
QuickBooks Online can deliver.
Keep checking back in
Checking back in with Chris identified that after he
received a check from his customer as a prepayment
deposit, he selected the + New button and then
selected Check in the Vendor column to record the
payment. 
By doing this, he created a vendor instead of a
customer and assigned Professional Fees as the
category. 
Identifying the problem
Let’s take a look at the Transaction Journal for this
entry to see why this isn’t the proper workflow for
this transaction. We can see that this decreases the
balance in the bank account (credit) and increases
the amount of Professional Fees that is reflected on
the Profit and Loss report. 
Coaching Chris in the best practice workflow
So how should Chris have recorded the prepayment
deposit from his customer using the best practice
sales workflow? 
We can point out to Chris that all the transactions in
the + New menu are sorted by entity type. All the
customer transactions are listed together, as are the
vendor and employee transactions. 
The easiest way for Chris to record the deposit
would be to create an unapplied received payment:
1. He selects the + New menu and
selects Receive Payment under the
Customers column
2. He can add the new customer here, enter the
amount and leave the payment as an open
credit on the customer’s account
3. Once he creates the invoice for the
completed job, he can apply the payment to
the invoice to reduce the
Browse the pic
Estimates and purchase
orders
The story so far
With some coaching on basic workflows, Chris has
thrived and business is great, but he’s called you up
to ask for some help with a new workflow that he
wants to use.
This week, Chris met with an important new
commercial customer who is looking to have a new
generator installed. This is a big job for Chris and
the customer has asked him to provide an estimate
of the job to submit to the company’s board of
directors for approval.
How can QuickBooks Online help?
As Chris’s trusted ProAdvisor, you’re happy to help
—and pleased he’s happy to touch base before he
dives in and you get that phone call when things
aren’t going well!
Walk him through how he can use estimates as part
of his business to order work materials for jobs and
eventually to invoice when the work is done.
Estimates and how to use
them
Watch the video
Creating an estimate
Chris has priced the estimated labor and material
costs for a new contract he is bidding for for All
City Library, and he’s ready to create the estimate
in QuickBooks Online.
Watch the video to see how it’s done. The
individual steps are below for you to follow.
1. Open the Sales Center by
selecting Sales then All Sales in the Left
Navigation Bar
2. Select the New Transaction button at the
top right of the screen then select Estimate
3. Select the customer, All City Library, from
the Customer drop-down menu
4. Enter tomorrow as the Estimate date and a
date in two weeks’ time as the Expiration
date
5. In the Product/services grid, enter the
following:
- 1 Commercial generator
- 8 hours of installation labor
- Miscellaneous item costs amounting to
$295
6. Select Save and send
7. Preview the Estimate in the send email
screen
8. Select Send and close  Chris has completed the installation of the generator
Using an estimate to
create a purchase order
Great news! All City Library has accepted Chris’s
estimate! Now he needs to change the status of the
estimate to Accepted and order the generator from
his supplier.  4. Select the invoice date and set the due date
Watch the video to see how it’s done. The
individual steps are below for you to follow.
1. Open the Customer Center by
selecting Sales then Customers from the
Left Navigation Bar
2. Select the Estimate box in the Money
Bar. All City Library’s Estimate will be
displayed
3. Select 1 Open Estimate in the Open
Estimates column and then select Estimate
#1004 to open the Estimate screen
4. Select the down arrow next to Pending and
change the status to Accepted
5. Select the down arrow next to Create
invoice and select Copy to purchase order
6. Select OK when the pop-up appears
7. The select Yes if another pop up appears
8. On the Purchase Order screen, select Lang
and Sons Electrical Supply from the
Vendor drop-down list     again.
9. Select All City Library as the customer
the Ship to field
10. Type Standard shipping please in
the Your message to vendor box
11. Select Save and send to send the purchase
order to the vendor
Once the generator is received from the vendor,
Chris can add the purchase order to a bill, check, or
expense, depending on how he’d like to pay for it.
Chris is going to pay for the generator using an
expense transaction, so let’s see how to do this
1. Select Expenses then Vendors from the
Left Navigation Bar
2. Select the blue Purchase Order box in the
Money Bar
3. Find the purchase order for Lang and Sons
and select the down arrow next to Create
bill in the Action column, then select Create
Expense
4. The Expense screen will open and be pre-
filled with the vendor’s name
5. Enter the payment date and select Add from
the drawer on the right-hand side of the
screen to add the details of the purchase
order to the expense
6. From the drop-down arrow next to Save and
Send, select Save and Close
Converting an estimate to
an invoice
and it’s time to bill All City Library.
Watch the video to see how it’s done. The
individual steps are below for you to follow.
1. Select Sales then Customers from the Left
Navigation Bar
2. Select the Estimate tile in the Money Bar
3. Select Start invoice in the Action column
for All City Library
for the payment as two weeks from then
5. From the drawer on the right-hand side of
the screen, select add under Estimate #1004
6. Select Total of all estimates lines =
$34,075.00 then select Copy to invoice
7. Select Save and Send
8. Select Send and Close 
And that’s it! Chris has completed the entire sales
workflow for the All City Library job. Way to go!
ProAdvisor tip
Craig’s Landscaping is the sample company on
QuickBooks Online test drive. It’s designed for you
to explore and try out new things without worrying
that you will break something or make a mistake.
Once you close this QuickBooks Online test drive
company it is completely refreshed, so please
remember to allow sufficient time to complete each
activity. Don’t worry if you have to close the test
drive before you are finished - you can always begin
Credit memos and
customer statements
The story so far
A few days after working with Chris on his estimate
workflow, you get another call from him.
Chris’s customer Jeffrey Jacobs hired Chris to
install a new light fixture in his house. Chris
installed the light and created invoice 1003 which
included $49.95 for the light and $85.00 for the
fixture. Mr. Jacobs promptly paid Chris by check
for the service and parts.
About a week later, Chris received a call from Mr.
Jacobs, who told him that the light fixture was not
working properly and asked for a replacement. 
Chris explained that the model he had in stock was
slightly different from the one that was installed
earlier but that luckily it was the same price. He said
he’d fit the replacement straight away—which he
did.
He needs to know how to record this in his
QuickBooks Online file, so that the customer’s
accounts payable gets a credit that can be applied to
their next invoice.
Chris also needs to show the customer what has
happened by finding some way of detailing the
payments and showing that the credit has been
recorded. 
How can QuickBooks Online help?
Sooner or later, all clients will come across an issue
with a service or product that the customer isn’t
happy with.
Credit memos in QuickBooks Online allow you or
your clients to allocate credits to customers so that
next time they are invoiced, the credit can be
applied. There’s even a way to set this up to happen
automatically.
You can also create a customer statement to show
this has been done.  5.
Let’s see how we can create a credit memo for
Chris.
Note that this method is just reducing accounts
receivable. It’s not refunding cash to the customer.
For that, you’d issue a refund receipt.
Why use credit memos?
When a client is working on creating credit memos,
they may have questions. Here are some common
ones you might need to answer!
Select the questions to find out more.  how to do this.
Why use a credit memo instead of just editing the
transaction?
It’s not best practice to change transactions once
they’ve been sent to a customer—it can cause
confusion and isn’t great recordkeeping.
This is especially true when the original invoice is
in a prior period, because making a change would
cause the books to become out of balance with the
tax return and change previously reported amounts.
Why not just bill for less on the next invoice?
It’s important to create a new transaction in
QuickBooks Online for each exchange between the
supplier and the customer.  money back for a return. In this case, Chris would
This provides clarity to the timing and sequence of
events with a customer. It can also affect the timing
and balances of sales tax liabilities and movement
of inventory in and out of the company.
Why not just refund in cash and not record?
It’s important to capture all transactions, paid in
cash or not, to ensure that the client’s records are
complete. If you pay the customer back in cash and
don’t record the transaction, you will pay sales and
income taxes on the sales transaction and receive no
benefit from the return transaction deduction.
Create a credit memo and
apply it to a customer
invoice
Let’s show Chris how to record a credit memo and
then apply it to a new installation invoice.
Watch the video to see how it’s done. The
individual steps are below for you to follow.
First, Chris will need to create a credit memo for the
damaged light fixture. 
1. Select the + New button then Credit Memo
2. Select Jeffrey S. Jacobs as the customer
3. Select Other Miscellaneous Materials as
the Product Service and QTY 1 and
rate $49.95 for the malfunctioning light
fixture
4. Select Save and Close
Next, Chris will need to create a new invoice
for the new light fixture.
From the + New button, select Invoice
6. Select Jeffrey S. Jacobs in the customer list
7. Add a new product item: Avalon Light
Fixture
8. It’s one item at $49.95
Next, Chris will need to manually apply the
credit to the new invoice unless he
has Automatically apply credits selected,
in which case QuickBooks Online would
prompt him to apply the existing credit
memo to the new invoice. See the
ProAdvisor Tip at the end of the lesson for
To manually apply the credit:
1. Select the + New button then Receive
payment
2. Select Jeffrey S. Jacobs from
the Customer drop-down list
3. Select Invoice #6 under the outstanding
transactions and Credit Memo #4 from the
credits by checking the box next to each
4. Select Save or Save and Close
Refund receipts
In other cases, a customer may simply want their
create a refund receipt. A refund receipt in
QuickBooks Online reduces the client’s cash
balance rather than a customer’s accounts
receivable balance
 1. Select the + New button, then Refund
receipt
2. Enter Bill Gallinger as the customer
3. Select the payment method (Check) and
refund from (Checking)
4. Enter Avalon Light Fixture as the
Product/Service
5. Select Save and Close
Customer statements
When it comes to credits and refunds, customers
may want a clear statement of where their account
with a business stands to make sure that a credit has
been applied.
One easy way to do this is by creating a customer
statement.
1. Go to the Sales menu and select Customers
2. Select the customer or customers you want
to make statements for
3. In the Batch actions drop-down,
select Create statements
4. In the Statement Type drop-down, select
the type of statement you’d like to make
Different statement types are available to suit
different situations.  Let’s cover the key principles before seeing how it
You can then select the date fields for the statement.
For instance, you could show all historic
transactions involving the customer, or just this
month’s.
Select the tabs in turn to find out more.
Balance forward
This customer statement type shows a list of
invoices and payments with the balance for the date
range selected.
It’s perfect for situations where a client wants to
provide customers with a summary of what is still
due on their account.
Open item
With this customer statement, you can show a list of
all open and or unpaid invoices.  Vendor Credits post as a debit to decrease accounts
Advise clients to use this when they want to provide
detail of all unpaid invoices, unapplied payments,
and credit memos to their customers.
Transaction statement
Need to help a client show a customer all of the
transactions between them and their business
between two set dates? Then use the Transaction
statement.
Clients might use this when there is a large volume
of transactions for a customer so they can see how
their payments have been applied.
ProAdvisor tip
View statements you created already:
1. Go to the Sales or Invoicing menu and
select All Sales
2. Select the customer or customers you want to
see statements for
3. Select the Filter drop-down menu. Then, in
the Type drop-down, select Statements
Vendor Credits
Chris ordered two generators for a job he’s doing
for a construction company. But, due to a delay,
work could only go ahead to install one of the
generators.
Chris had no place to store the second one until the
work could go ahead so he decided to return it to the
vendor.
The vendor agreed to credit Chris’s account for the
returned generator, which he could always reorder
later.
He needs some coaching in how to record the credit
in QuickBooks Online and make the payment for
the generator he used.
Can you help?
How can QuickBooks Online help?
Vendor Credits are a way of recording a credit to
vendors’ accounts payable so that the credit can be
applied to an existing open bill or the next bill
received from a particular vendor.
It’s very similar to the credit memo Chris recorded
in the last lesson to credit a customer’s accounts
receivable account, but for vendor transactions.
works in action in Chris’s file.
Vendor Credit workflows
Vendor Credits are designed to account for returns
of products or services or discounts received on
account after a bill has been issued by a vendor and
recorded in QuickBooks Online.
For example, if Chris purchases some wire which is
found to be faulty, the vendor will normally issue a
credit to remove the expense of the faulty electrical
wire.
The Vendor Credit can then be:
 Applied to an existing bill
 Held as open and applied to a future bill
payable.
Note that, like credit memos, Vendor Credits can be
automatically applied to existing open or future bills
by selecting Automatically apply credits in
the Advanced tab in Account and Settings in
the Gear menu.
Creating a Vendor Credit
Let’s see how to record the Vendor Credit for Chris.
Watch the video to see how it’s done. The
individual steps are below for you to follow.
There are two separate bills from the vendor, Lang
and Sons, in the Expenses Center, one for each of
the generators Chris ordered. Each was priced at
$500. 
Sam at Lang and Sons agreed to the credit when
Chris returned the generator today, so we can go
ahead and create the Vendor Credit in QuickBooks
Online.
1. Select the + New button
2. Select Vendor Credit, under
the Vendors heading
3. In the Vendor Credit screen, select Lang
and Sons from the Vendor drop-down
4. The date of the credit is today so we can
leave it as it is
5. Select Generator - 3500 Watt from the
Products and Services list under Item
details
6. Add a note explaining the credit
7. The quantity is 1. Add the rate, which
is $500, the credit amount or the full price of
the generator
8. Add the customer that the generator was
ordered for, Jaime Sullivan
9. In the memo field, add Credit issued by
Sam
10. Select Save and close
Back in the Expenses Center we can see the
original bills, plus the Vendor Credit. Now
let’s apply the Vendor Credit to a bill.
11. On the row of the first bill for the generator,
select Mark as paid from the drop-down
next to the Schedule payment button. This
is the one Chris returned
If we scroll down, we can see that the Vendor
Credit has already been applied to the total
outstanding amount ($1,000 for two generators),
reducing the amount payable to $500.
Chris will be paying for the second generator by
check which he will give to Sam later, so we’ll
record that payment later.
ProAdvisor tip
Vendor Credits and refunds are tricky for end users
and don’t happen often enough for most users to
really learn these workflows, so it’s a good idea for
ProAdvisors to refresh their clients from time to
time on best bookkeeping practices for QuickBooks
Online.
Deposit transactions
The story so far
Chris has taken out a Small Business
Administration (SBA) loan to help get things started
and provide some working capital for his new
company. The bank has sent him a check and now
he needs to record the deposit into his checking
account.  individual steps are below for you to follow.
How can QuickBooks Online help?
In QuickBooks Online you can easily categorize
deposits like refunds or proceeds from loans so that
they’re not confused with sales income, and so that
taxable and nontaxable income are separate and in
the right place.
Let’s look at how this is done.
Understanding deposit
transactions
Along with grouping existing payments in
Undeposited Funds into deposits, deposit
transactions are also used for adding new deposits
for activity not related to sales transactions, such as:
 When a company receives funds from loan
proceeds or contributions of cash from
owners
 When companies receive a refund from a
vendor and want to record it directly against
the expense account or to a Refunds
Received income account
 When a company doesn’t record income
using sales transactions (invoices or sales
receipts) and wants to record deposits
directly to income accounts
 When an employee reimburses the company,
and the reimbursement needs to be recorded
against the Employee Loan receivable
account
 When there is a tax refund. This screen is
where you record it in the Tax Refunds
account 
Chris’s SBA loan check is a good example of the
first category.
Put simply, this is money into the business that is
not subject to sales tax or income tax and that
doesn’t have to be matched to a sales receipt or
invoice in QuickBooks Online.
It does, however, need to be recorded and
categorized to the appropriate account on the Chart
of Accounts.
ProAdvisor tip
You can add multiple funds to the same deposit. For
example, it might include both customer payments
and other funds in a single deposit.
Recording a deposit
transaction
Chris needs to record the deposit he made at the
bank for the loan proceeds—but he needs to make
sure it’s in a separate category from his sales
income.
Let’s see if we can help.
Watch the video to see how it’s done. The
1. Go to the + New button, and in the menu,
select Bank Deposit, just like we did for
recording the sales deposits
2. Add a date: 09/30/2020
3. Specify the account as Checking
4. In the Add New Deposits section, enter
deposit detail: Received From:  Bank of
Anytown
 5. For account, select SBA Loan Payable.
Note that this is a liability account, so this
deposit will not be classified as income
6. Add the description. Make it Proceeds from
loan
7. Payment method is Check. Enter the
insurance company’s check number, 5487,
as the reference number
8. The amount should be $25,000.00
9. Now select Save and Close
QuickBooks Payments
The story so far
Chris is hoping that many of his customers will pay
him electronically for the products and services he
provides to them.
It would save him some trips to the bank and would
be easier for his customers, too. Plus, once
everything is set up, payment information goes
straight into QuickBooks Online automatically,
without the need for manually recording
transactions. It’s easy for both customers and for
Chris.
And it’s always a good thing to make it easier for
customers to pay on time!
Chris is a little new to this, so could use some help
in a few areas.
How can QuickBooks help?
You’ve already helped Chris enable QuickBooks
Payments and now it’s time to show him how easy
it is for him to record electronic payments made by
a customer!
We’ll start the process on the Receive Payment
screen.
Payments via invoices
and sales receipts
Remember when Chris was set up to accept digital
payments through QuickBooks Payments, we asked
him to select the bank account where customer
payments would be deposited.
When Chris creates an invoice, he can select the
way he’d like to get paid (credit card or ACH or
both) and then send the invoice via email to his
customer. When the customer selects the View and
Pay button to view the online invoice, they will
then see the option to select the Pay button. The
great news is that any payment made here will be
recorded automatically in QuickBooks!
Sometimes Chris will be paid by his customers at
the time of sale and won’t want to create and send
an invoice. In these cases, he just needs to create a
sales receipt that will allow him to record both the
sale and payment on the same screen in
QuickBooks. He can then email the sales receipt to
his customer, so they have a record of the sale.
Creating a sales receipt
Chris begins the workflow by selecting the +
New button and then Sales Receipt in the Customer
column.
After completing the customer and sales details,
he’ll select Credit Card as the payment method.
Chris can then enter the customer’s card details and
can send the receipt via email or print it out.
It’s that simple!
Let’s see how it works.
Browse the pic
ProAdvisor tip
Remember from our earlier advice about setting up
QuickBooks Payments. Your clients need to sign up
for QuickBooks Payments themselves because as
the process forms a contract. If you were to sign
them up you’d be signing the contract— and not
your client.
How QuickBooks
Payments works
So how does QuickBooks Payments work for
Chris’s customers?
Select the steps to find out how it works at each
stage of the payment process. 
Step 1: Invoicing
Chris has invoiced Brad Hall for an emergency call
made last night. He’s created an invoice and
emailed it to Brad for payment.
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Step 2: The customer receives the invoice
When Chris sends the invoice to Brad, the status is
updated to sent in the Invoices tab in the Sales
Center.
Brad receives the email and is able to tap Review
and pay to view the invoice in a browser and make
a payment.
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Step 3: The payment process
Brad can enter his payment information (debit card,
bank transfer, or credit card) and select Pay
$125.00. 
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Step 4: Payment confirmation
Brad instantly receives a payment confirmation and
can print or download the receipt directly from his
browser. 
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Step 5: Payment notification and updates
Chris will receive a notification of the payment, too!
If he uses the mobile app, a notification will pop up
on his mobile device, and he will also receive an
email notification of the payment. 
The payment status will automatically be updated in
QuickBooks Online. There’s no need for Chris to
record the payment or the deposit—QuickBooks
Online does it all for him!
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Recurring Payments
If Chris has a customer’s credit card or bank
account information on file and has authorization
from the customer to charge a recurring amount, he
will be able to create sales receipts that
automatically book the sale in QuickBooks Online
and deposit funds into his bank account.
For Chris, this is a great way of automatically
billing and getting paid for services that are, say,
monthly maintenance plans or service agreements.
Watch the video to see how he gets it done. His
individual steps are below for you to follow.
1. Select the Gear icon
2. Select Recurring transactions
3. Select New 
4. From the Transaction Type drop down,
select Sales Receipt
5. Select OK
6. Specify a name for the template that
describes what the recurring charge is for, in
this case Maintenance
Then complete the rest of details as you
would normally, in this case
7. The Type is Scheduled for 3 days in
advance
8. The Customer is Bill Gallinger
9. The Interval is Monthly on the 1st day of
every month
10. Select a Start date: 1st of November 2020
11. For End, leave as None
12. Select Credit Card as the Payment method
13. Then add the Product/Service you’re billing
the customer for: Installation Labor
14. Finally, select Save template
That’s it. Chris will now get paid on the first
day of every month for the regular work he
completes for the customer.
Instant Deposits
Cash flow is a top priority for hard-working small
business owners. Whether it’s for running payroll,
buying new stock, or paying a vendor, it seems like
there is never enough cash to go around.
QuickBooks Payments Instant Deposits is one way
for clients to get their hard-earned money faster.
For a 1 percent fee, available funds can be instantly
deposited into their bank account, allowing them to
pay their bills, pay employees, and keep the
business moving.
Select the tabs in turn to find out how your
clients could benefit.
The benefits
Payments received from QuickBooks Payments can
take up to five days to post to your client’s bank
account, depending on their plan.
The Instant Deposits feature gives clients the option
to get their money right away. They can deposit a
minimum of $1 or a maximum of $2,000. Clients
can use Instant Deposits up to three times daily as
long as they do not exceed the $2,000 limit.
Here are six ways this could help them and their
business.
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How much does it cost?
With low, flat rates and no monthly or setup fees,
clients can access their money anytime, anywhere
for an additional 1% per transaction.
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Who’s eligible?
Next-day deposits for credit card and ACH bank transfer
payments are available to qualified new QuickBooks
Online customers whose accounts are active and in good
standing.
How to set up Instant
Deposits
Instant Deposits uses push-to-card technology to
deposit your client’s available balance to their debit
card within 30 minutes.
To get started, clients need to link a supported debit
card to QuickBooks Online.
Most standard U.S.-issued Visa or Mastercard debit
cards are supported. These debit cards should be
issued by a bank or credit union and linked to a
transactional checking account.
Instant Deposits does not support prepaid bank
cards, ATM and credit cards, or wallet cards like
PayPal.
1. From the Left Navigation Bar, clients
select Sales, then select Deposits
2. Clients select Link debit card
3. They enter the debit card information
4. QuickBooks Online will text a confirmation
code to them to verify
ProAdvisor tip
The linked debit card doesn’t have to be issued by
the same bank associated with the current connected
QuickBooks Payments account.
Browse the pic
Using Instant Deposits
Once clients have linked a debit card, they can
request instant deposits of their available balance.
Select the steps in turn
Request an instant deposit
1. Clients select Sales, then Deposits
2. Check the available balance. This is the sum
of payment transactions processed before
3:00 PM PT that qualify for instant deposit.
The balance can be made up of one or more
transactions up to the $2,000 daily
maximum
3. They select Get it now
Browse the pic
 Confirm Deposit
They review the total amount for the instant
deposit and the associated fees. They then
select Get it now if they want to proceed.
What happens next?
The funds will be deposited to the bank account for
the debit card linked to Instant Deposits. Client will
usually see funds deposited in minutes, but it can
take up to 30 minutes depending on the bank.
The 1% fee for using Instant Deposits is removed
from the bank account on file for QuickBooks
Payments the next business day. (This might not be
the same as the debit card your client linked for
Instant Deposits.)
All transactions are subject to risk review and third-
party delays. For more information, review
the merchant agreement.
Browse the pic
ProAdvisor tip
Recurring Payments can be a great way to keep on
top of regular invoicing but remember advise your
clients to edit them if their contact details or
payment plan changes.
Journal Entries
The story so far
Chris needs some equipment to run his business—
and to get started, he’s using items that he already
owns.
Chris wants to make sure the equipment donation to
the business is recorded, but how does he log the
contribution?
Let’s see how he can do just that.
How can QuickBooks Online help?
Journal Entries in QuickBooks Online is a way to
post debits and credits directly to accounts in the
General Ledger.
Using sales and purchase forms to record income
and expenses is the preferred method, but
sometimes forms just aren’t appropriate. Using a
journal entry is another way to adjust account
balances.
When to use Journal
Entries
A general journal entry is an accounting transaction
that is posted directly to the general ledger.
For example, if Chris’s tax accountant sent the
annual depreciation on the equipment, Chris would
use a journal entry to debit the depreciation expense
and credit the accumulated depreciation.
Journal entry rules:
 Total debits must equal total credits in order
to save the journal entry
 You cannot use Products and Services items
in a journal entry
 When posting to accounts receivable, you
must specify a customer
 When posting to accounts payable, you must
specify a vendor
 You may use multiple accounts receivable
and/or accounts payable accounts in the
same journal entry
 You can’t mark an amount as billable to a
customer
Creating Chris’s journal
entry
Chris needs to log his contribution of the equipment
to the business as a debit to fixed assets and a credit
to equity.
Watch the video to see how it’s done. The
individual steps are below for you to follow.
1. Select the + New button at the top of the
QuickBooks Online window
2. Under Other, select Journal Entry
3. Enter today’s date
4. Enter or accept the journal entry reference
number
5. On the first row, add new
account: Machinery & Equipment
6. Select the Type, make it Fixed Asset, then
add the Detail type: Machinery &
Equipment. Chris will be tracking
depreciation on the equipment, so check the
box that says Track depreciation of this
asset. Leave the original cost and
depreciation fields blank
7. Then select Save and Close
8. Enter a debit amount of $5,000 and enter a
description to record a contribution of
equipment
9. On the next row, select Owner’s
Equity from the drop-down list. The credit
should automatically be populated
with $5,000, matching the debit above
10. Enter a description matching the debit above
11. Select Save and new or Save and close
Adjusting journal entries
Adjusting journal entries are often made at the end
of an accounting period, before financial statements
are produced for the company.
Only you, as Chris’s accountant and an Accountant
user, can mark a journal entry as an adjusting entry.
There are a few scenarios where journal entries are
usually marked as adjusting entries.
Select the headings to find out more. 
Accrued expenses
These are expenses you’ve accrued but haven’t paid
yet, like a loan interest or accrued payroll. Accrued
expenses appear on the Balance Sheet as liabilities.
Deferred expenses
This is where you’ve paid for something but not yet
realized the benefit. An example of a deferred
expense would be if you pay for your insurance a
year in advance. Deferred expenses appear on the
Balance Sheet as assets.

Accrued revenues
This is where you’ve earned the revenue, but the
customer has not yet been invoiced, a common
practice in many industries that work on long-term
contracts. These appear on the Balance Sheet as
accounts receivable, which is an asset account.
Deferred revenues
These occur when you’ve been paid in advance by a
customer but you haven’t finished the work yet.
This appears on the Balance Sheet as unearned
income, a liability.
Non-cash transactions
Not all expenses are cash expenses. Some things
represent expenses that don’t have a cash effect on
your business. Depreciation and allowance for
doubtful accounts are two examples of common
non-cash transactions.
If regular adjustments aren’t recorded to reflect
these activities, it’s easy to get a skewed picture of a
company’s financial position. Here’s a quick
example:
Chris has an annual loan interest payment due in
June and no liability has been accrued for it during
the year.
Chris could easily overestimate his available cash if
he doesn’t keep track of this growing current debt.
His profit for each month will also be incorrect.
Also, when he makes the annual business insurance
payment and it’s not accrued, the monthly insurance
expense will be reflected in the wrong accounting
period.
As an accountant, you can set these adjusting
journal entries to post automatically using the
Recurring Transactions feature in QuickBooks
Online. That way, you know that most (if not all) of
the necessary adjusting entries are reflected when
viewing monthly financial reports.
To mark a journal entry as adjusting, just enter the
journal entry as normal and check the Is Adjusting
Journal Entry? checkbox.
ProAdvisor tip
Note: Only you as a QuickBooks Online
Accountant user, accessing a client’s accounts
through QuickBooks Online Accountant, can set an
adjusting entry, so only you can see the checkbox.
ProAdvisor tip
There is a special report in QuickBooks Online
Accountant called Adjusting Journal Entries. You
can use this to easily find all adjusting journal
entries clients have entered.
Checking the Adjusting Journal Entry box adds the
Adjusting Journal Entry report to the column on the
Adjusted Trial Balance report.
Pay down a credit card
The problem…
As finance professionals, you know that
categorizing transactions in the correct accounts is
vital to keep the books tidy and financial statements
accurate.
Sometimes, our clients aren’t so careful. A common
problem is when clients miscategorize credit card
payments or add them via their bank feed.
How can QuickBooks Online help?
QuickBooks Online is always looking for ways to
help clients follow the correct workflows.
The new Pay down credit card option is another
example of this. It makes it easy for non-
accountants to categorize credit card payments in
the correct account, keeping their balances and
reports tidy and accurate.
Why use the Pay down
credit card feature?
In the past, clients could record their credit card
payments in a couple of ways:
 By creating a transfer transaction and
matching it from the bank feed
 By writing a check 
But they aren’t always sure how to categorize the
payment correctly. A common mistake is to
categorize payments to a credit card to an expense
account rather than to the credit card liability
account. This leads to incorrect balances in both the
Banking Center and on the Profit and Loss and
Balance Sheet.
The Pay down credit card feature makes it simple to
follow the correct workflow. What’s more, it uses
client-friendly language to help them make the right
choices.
Clients still have the choice to pay by check if that’s
what they prefer.
ProAdvisor tip
By coaching your clients in this workflow, you can
help avoid duplicate or miscategorized transactions
that you need to tidy up for them at month end.
How to use the Pay down
credit card option
Craig received his monthly Mastercard credit card
statement. He has enough in his checking account to
cover it, so he goes ahead and uses his online
banking to make the payment.
Next, he needs to update QuickBooks Online to
record the payment.
Watch the video to see how it’s done. The
individual steps are below for you to follow.
1. Select + New, then select Pay down credit
card in the Other column
2. Select the credit card account that is being
paid. In this case, it’s Mastercard
3. In the Payee field, again, select Mastercard
4. Enter how much was paid
 5. Enter the date of payment
6. Select the account that the payment was
made from. Notice the language is really
client-friendly here: “What did you use to
make this payment?”  checking account to pay down the company credit
Notice that you also have the option to
record making the payment by check.  QuickBooks Online:
Plus, just like with other transactions, you
can add memos and attachments.
7. Select Save to record the transaction
Now that’s it done, QuickBooks Online will
work its magic. But as a finance
professional, you might want to peek under
the hood and see what’s happened in the
background.
8. Select the More button at the bottom of the
transaction and choose the Transaction
Journal
9. Here, you can see the Checking account
being credited and the credit card account
being debited. Just as it should be, so that
the financial statements will be spot-on!
ProAdvisor tip
Remember to coach your clients in how to make
this great new feature part of their regular
workflow.
Transfers
The story so far
Chris is an experienced professional. Just because
this is his first independent business venture doesn’t
mean he’s not aware of the importance of making
sure he’s planning ahead and putting money aside to
meet his tax liabilities.
One morning, Chris calls asking how to set up a
regular transfer of funds into a savings account, just
to keep on top of his tax liabilities until he can
predict things more accurately.
Are you ready to show Chris just how easy setting
up a transfer is?
How can QuickBooks Online help?
Transfers between different balance sheet accounts
are easy to set up in QuickBooks Online, once the
accounts themselves are set up.
In this lesson, you’ll see just how easy transfers are
to set up and how they can be set up to recur.
As you’d imagine, QuickBooks Online will keep
track of every transfer automatically, whether it’s
manually configured or recurring.
The QuickBooks Online ecosystem is constantly
evolving to meet your needs.
Your current experience may differ from what you
see in this lesson.
What is a transfer?
Companies often transfer funds between company-
owned bank accounts. Perhaps the company is
moving funds from the general operating account to
the checking account used for payroll, or from a
savings account to the checking account. Perhaps
the company transferred funds from the company
card.
Here’s a summary of the transfer functionality in
 The transfer screen is used to move funds
between two balance sheet accounts
 The transfer screen is not used to record
income or expense
 A transfer is a 1:1 transfer of funds, there are
no splits allowed
 There are no customers, vendors,
employees, or Products and Services items
involved. These fields are not available on
the transfer screen
 You don’t use the Transfer feature to make
transfers between your bank account and
your vendor’s bank account
Recording a transfer
A transfer of money between accounts is not an
income or expense, so you and Chris will need to
use the Transfer screen. 
Watch the video to see how it’s done. The
individual steps are below for you to follow.
Chris needs to set up a transfer of $200 into his
savings account.
1. Navigate to the + New button
2. Find the Transfer link, select it to go to that
screen
3. Select the account from which you are
transferring funds for Chris. We need to
transfer out of his Checking Account
4. Select Savings account, which is where
Chris wants the funds to be transferred
5. Chris wants $200 to be transferred
6. Fill in the date. Make it today’s date
7. Select Save and close