Reconciling payments is an important accounting process to ensure your QuickBooks records match real-world transactions. It involves comparing deposit details from your bank to income transactions in QuickBooks and clearing any discrepancies.
Properly reconciling payments prevents QuickBooks errors, reduces fraud risk and maintains accurate books. Here are steps to reconcile customer payments in QuickBooks:
Record Customer Payments
First, record all customer payments received for the deposit period you are reconciling. This includes:
- In-person payments recorded in QuickBooks Sales Receipts
- Online payments synced from a payment processor
- Checks or cash received and entered manually
Be sure payments are marked ‘Paid’ against the correct customer invoice(s) in QuickBooks.
Match Deposit Details
Pull up your bank deposit statement for the same period. This lists all deposits made from real-world payment transactions.
Match the deposit amounts on your bank statement to the total ‘Deposit’ amounts shown in QuickBooks Payments > Transactions tab for the same date range.
Compare Transaction Details
For each deposit, compare the line-item details:
- Payment amounts should match individual transactions in QuickBooks.
- Payment methods (e.g. Visa, check) should match.
- There should be a matching QuickBooks transaction for every deposit line item.
If you notice missing transactions, duplicate payments or incorrect amounts, you’ll need to research the discrepancies.
Identify Discrepancies
If you find discrepancies between your bank deposits and QuickBooks transactions, you’ll need to identify why.
Common reasons include:
- Missing or duplicated transactions
- Incorrect payment amounts recorded
- Payments entered for wrong customer or invoices
- Time delays in online payments syncing
Carefully research each discrepancy to determine the error. Review your accounting records and contact customers as needed.
Make Reconciling Adjustments
To fix discrepancies, you may need to make reconciling adjustments:
- If payment amounts are entered incorrectly in QuickBooks, edit the transaction.
- For missing transactions, add them to QuickBooks.
- Remove duplicated transactions.
- Correct payments applied to wrong invoices, customers or accounts.
Be sure to track any changes made in a reconciliation log or notes.
Re-Match Deposit Details
After making adjustments, re-compare your QuickBooks payment transactions to the bank deposit details.
The amounts and line items on deposit slips should now match those from your accounting system.
Double check payment dates, methods, amounts and the total deposit balances match exactly.
Record Adjustments
For any adjustments made, record them as journal entries in QuickBooks to account for changes. This keeps a proper audit trail.
If a missing payment was added, make a journal entry recording the payment into the income account.
For erroneous overpayments, enter a journal line item as a deduction to correct the income account.
Perform Next Steps
Once deposit transactions fully match QuickBooks entries, you can perform next steps:
- Mark payments as ‘Cleared’ in QuickBooks so they don’t show as unreconciled in future.
- Proceed to reconcile the expense and liability accounts as well for full reconciliation.
- Move the reconciled date forward and proceed with the next deposit period.
- Print and attach the reconciliation report to the bank statement for your records.
Automate Reconciliation
You can save time by enabling tools to automate reconciliation:
- Use a payment processor that syncs transactions into QuickBooks automatically.
- Opt for bank feeds to directly import statement data.
- Install an auto-reconciliation app to match transactions quickly.
Properly reconciling payments is crucial for accurate books. While tedious, taking the time to carefully compare and fix discrepancies will ensure integrity in your company finances. Implementing reconciliation best practices and automation can help streamline this critical accounting process.