How to Resolve Small Open Balances or Credits in QuickBooks

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Working in QuickBooks is convenient as it is highly user-friendly. It compliments your desire to have an efficient system for higher profits and business performance.

However, there is always a remote chance of Human errors happening even while you or your accountant is using QuickBooks. Entering daily transactions, updating data regularly and catering to customer needs are some factors that might lead to a mistake in data entry.

In this article, we will know some common mistakes that might occur within the A/R and small open balances or open credits.

Common Mistakes: 

  • Payment is not applied to an Invoice
  • Credit is issued & not applied to an invoice.
  • The “small balances” need to be written off. 

Symptoms:

  •  “A/R aging summary” has a lot of aged balances & lines with zero
  • There are small amounts in the total column
  • The open invoices reports have many credits or balances. 

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How to Resolve such problems: 

Review A/R Aging summary and open invoices reports:

  • Go to Reports
  • Select Customers& Receivables
  • Run the A/R aging summary and the open invoice reports
  • Open Invoices report
  • The date defaults to “today”- leave the date set to “today” (this will prevent writing off any amount that was applied on a later date to any other open customer invoice.)
  • Review this report (it will reflect payments or credits not applied to an invoice).

Fix the “Unapplied Customer Payments & Credits with CDR: 

  • Got to the Client Data Review Feature
  • Select a name from the customer’s tab and then on the “Invoices & charges” tab
  • Select a payment to apply an invoice by placing a checkbox
  • Choose “Auto apply all” to apply for all the payments or choose each “payment & Invoice individually.
  • Choose to apply
  • Once “apply” is selected, the transactions will gray out
  • Select “SAVE”

A Manual clean-up of “open items “without” CDR:

Clean up of the data file is required often without taking help of the CDR tools. Also, the “CDR tool” will not be of assistance if a journal entry was entered into Accounts Receivable. If the deposits were filled in directly to A/R on the deposits and not in the Income account, then also the “CDR Tool “ will not be any help. Follow the below steps for a manual cleanup.

  • Select “Receive Payments”
  • select the appropriate customer.
    Leave the amount as “zero.”
  • Select “Discounts & Credits”
  • In Discounts & credits- select “Credit or Journal Entry” to apply to an open invoice.

Write-off small balances:

An easy way to write-off small balances is when the payment is recorded in the “Receive Payments window.”

  • In the Open Invoices report- double click on the invoice which has an open balance.
    Select “History Link” to open the transaction history.
  • From the “Transaction history dialog box” -select Go to the button and navigate to “Customer Payment window.”
  • Choose “Write off the extra amount.”
  • Select Save and Close (Once the “write off amount” is reflected & the general ledger a/c to which the write off is to be charged will appear. Select the account for which the amount is to be written off)

At any point, If you are unable to understand any troubleshooting step, you can call at QuickBooks Error Support Phone Number 1-877-263-2742 and speak with QB experts. 

Write-off invoices in the “Client review data.”:

In the CDR, there is also a “Write Off invoices tool.” You can write-off invoices, statement charges or financial charges together from a single window.

NOTE:  Use “fix unapplied customer payments & credits tool” before using this option. If you have credits available, a warning message will appear.

  • Make a list of invoices that are to be written off (criteria wise)
  • Click “Find All”
  • Enter criteria on the screen to limit down the list
  • Click “Find All.”
  • In case no criteria are selected – “all open invoices” will show on the list.
  • If no criteria are selected, all open invoices appear on the list.
  • Fill in the date in the Up to the field.
  • Now choose” invoices to write off.”
    Select the invoices (choose “select all” to choose all the invoices in the list)
  • After this “specify the write off terms.
  • Choose “write off account” from the list (change write-off date if required)
  • Fill in “Write off class” if class tracking is used
  • Select Preview & Write-off Selected Invoices. A confirmation message comes reflecting- all invoices to write off, the write off account & the total amount to write off. (click “WRITE OFF to complete the process or choose to Cancel to go back to the main window)
  • Specify the write-off terms.
  • Select the Write Off Account from the list. A write off account is required.
  • Change the write-off date, if necessary. A write-off date is required. By default, the write-off date is the last day of the review period.
  • Enter a write off class if class tracking is used.

Writing Off Vendor Bills

When you purchase items from vendor the Accounts Receivable increase. The two balances might offset each other. We have a couple of remedies available and which one to choose will depend upon the transaction volume.

Create a Check or Deposit

You need to determine which balance is lower – the accounts payable amount or the accounts receivable amount. Based on the lowers, the Checks will be “written off” and corresponding deposit will be made to A/R account for the same amount to offset the amount outstanding. Ensure to have the same amount for the check and deposit. The remainder in A/R or A/P is either the owed or due from the vendor or customer. The balance in the company account should always appear as $0.

Issue a credit memo:

Make a “credit Memo” for the amount of the A/R that getting offset by A/R and a credit is issued for that bill for the same amount.  Ensure that “credit memo and the credit” should be the same amount to create an equal offset. In the end, the transaction should net to $0 without having a balance in either of the accounts.

You ever feel the need of taking advice from your fellow business owners that happened to be our existing subscribers, you can visit our thriving QuickBooks Community.

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