QuickBooks Online Student Guide

Chapter 3
Customers and Sales
Part I
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Table of Contents
Lesson Objectives  3

Setting Up Customers   3

Setting Up Products and Services   6

Setup a Service   8

Entering Sales  10

Sales and Customer Reports   16

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Lesson Objectives

Finding new customers and making sales is a critical component of every small business.
Understanding how to work with customers is an important part of QuickBooks. You’ll discover
important steps to work with customers and sales workflows.

In this chapter you’ll learn the following:

• How to set up new customers

• How to set up products and services

• Creating sales transactions including invoices and sales receipts

• Receiving customer payments and making deposits

• Basic customer reporting

Setting Up Customers
Customers are the people and businesses that you sell your products or services to. Before making
sales in QuickBooks it’s a good idea to add customers. You can add customers from the customer
list and you can add them as you go on sales transactions.

To add a new customer:

1. Click Sales.

2. Click Customers.

3. Click New Customer.

4. Enter the information in the new customer window.

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Address Tab
Enter your customer’s Billing address, and shipping address on this tab. If the Shipping address is
the same as the Billing address, select ‘Same as billing address’.

Notes Tab
Enter any notes for the customer. These notes will only appear on the customer record, and will
never be sent to the customer. You can update these as needed.

Tax Info Tab

Enter your customer’s Business number if required.
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Payment and Billing Tab

From this tab you can select your customer’s preferred payment method, preferred delivery method
(how they receive sales forms), terms, and opening balance. When you select the payment method,
delivery method, and terms, QuickBooks will enter these on any sales forms you record for your
customer. You can change this as needed when you record a sale.

Language Tab
On the language tab you can choose to send invoice transactions to your customers in the several
different languages.

Attachments Tab
Store any attachments for the customer here. These can be any file format, if the file size is less
than 25MB.

Edit Customers
Once you have your customer set up, QuickBooks will use their information when you select
them on a sales form. If you need to make any changes to this information, e.g. address, contact
information, etc., click on the customer name in the customers list, and click the Edit button.

To set up a customer:

1. Click Sales.

2. Click Customers.
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3. Click the customer name and click Edit.

4. Make any changes.

5. Click Save to save the customer record.

To learn how to add a customer watch this video: https://youtu.be/rkMYXr-Aybw

Setting Up Products and Services

Products and services are the items you sell to your customers. You can make these as simple or
complex as you need to based on your business needs.

While they provide a quick means of data entry, a much more important role for items is to handle
the behind-the-scenes accounting. When you create an item, you link it to an account; when the
item is used on a form, it posts an entry to that account and another entry to the appropriate
accounts receivable, accounts payable, etc.

While products and services are easy to set up, you should spend some time deciding how they can
best work for you before you start setting them up and using them. Use your current list of services
and products as a starting point. Consider how much detail you want on your invoices or statements
and set up your items with that level of detail in mind.
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To view the Products and Services list, click the Gear icon and then click Products and Services.

There are four types of products and services in QuickBooks.

Inventory
In QuickBooks, an inventory part is one of the types of line items you can use when you’re filling out
a sales or purchase form. You use inventory items to track merchandise your business purchases,
keeps in stock as inventory, and then resells. For each inventory item, QuickBooks tracks the current
number in stock and the value of your inventory after every purchase and sale.

Non-inventory
In QuickBooks, a non-inventory part is one of the types of line items you can use when you are filling
out a sales form or purchase form. Use non-inventory part items to track merchandise that:

• You purchase but do not resell.

• Materials that are used in the delivery of your services.

• You purchase and resell but do not stock in inventory or track as inventory.

Service
Services you charge for or purchase. Examples include specialized labour, consulting hours, and
professional fees.
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Bundle
Bundles are groups of products and/or services you sell together. For example, gift baskets or
services that are always performed together.

Setup a Service

1. Click the Gear icon and click Products and Services.

2. Click New.

3. Select the Service type.

4. Enter the Name and SKU (optional) for the service.

5. (Optional) Select a Category for the service.

6. Enter a Description to display on sales forms.

7. Enter the Sales price/rate.

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8. Select the appropriate Income account to track revenue for this service. This is the most
important part of the setup of the service. Choosing an income account in this field means
that every time this service is used on a sales transaction, QuickBooks will credit this
income account.

9. Choose the Tax to be added to the sale of this item.

10. Click Save and close to complete the setup of the item.

NOTE  If a subcontractor performs this service, enter the Purchase information for
the service.

To learn how to add a service watch this video: https://youtu.be/SjHw12GxmFo

Setup a Non-inventory Item

1. Click the Gear Icon and click Products and Services.

2. Click New.

3. Select the Non-inventory type.

4. Enter the Name and SKU (optional) for the product.

5. (Optional) Select a Category for the product.

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6. Enter a Description to display on sales forms.

7. Enter the Sales price.

8. Select the appropriate Income account to track revenue for this product.

9. Choose the Tax rate.

10. If you purchase this product from a supplier, enter the purchase information.

11. Click Save and Close.

NOTE  A category is a means of classifying products and services you sell to

customers. Categorizing what you sell can help you better understand sales volume and what
people are buying. Additionally, categories save you time when completing transaction forms,
since you can search for items by category.

Entering Sales
There are two main workflows to enter sales in QuickBooks Online. Which one you choose depends
on whether your customer is paying you now, or if they pay later.

Invoices vs. Sales Receipt

If your customers don’t pay you in full at the time you provide your service or product, or if they pay
in advance, you need to track how much they owe you. Using an invoice helps you keep track of
what your customers owe you (or your “accounts receivable”).

If your customers pay in full at the time they receive your service or product, then you don’t have to
track how much they owe you. However, you might want to track each sale, calculate its sales tax, or
print a receipt for the sale. In that case, use a sales receipt.

Invoice Workflow Overview

Use the invoice workflow when your customer pays you later for a product or service. Start by
entering the sale on the invoice form, then record the customer payment in the Receive Payment
window. Finally, record the deposit of the customer payment in the bank account.

Invoice    Receive Payment    Bank Deposit

In QuickBooks, an invoice is a form on which you record details about a sale to a customer who
owes you money. It lists the services you’re providing or the products you’re selling. It also shows
the quantity and price or rate of each item. If you need to make automatic adjustments to prices (for
example, discounts or markups), invoices will work for you.
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Step 1: Enter Customer Invoice

1. Click the New menu and click Invoice.

2. Click the Customer drop-down and select the customer name.

3. Enter the Date of the sale.

4. In the Product/Service area of the form, select the appropriate products and/or services.

5. Save the invoice.

To learn how to create an invoice watch this video: https://youtu.be/7ttDImRGvIE

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NOTE  Click Print or Preview to review and print an invoice.

You can email an invoice to a customer when you click Save and Send.

After you enter the invoice, the customer’s Accounts Receivable balance is increased, and the
income account(s) linked to the products and services on the invoice increase. You can see this on
the customer record, sales reports, and the Profit and Loss and Balance Sheet reports.

Step 2: Receive Customer Payment

1. Click the New menu and select Receive Payment.

2. Click the Customer drop-down and select the customer name.

3. Select the Invoice(s) to receive payment against.

4. Enter the Amount of the payment.

5. Select the Payment method.

6. Enter a Reference number (if applicable).

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7. Select the appropriate Deposit to account.

NOTE  Select Undeposited funds if the payment will be deposited with other
payments. This will ensure that the deposit amount in QuickBooks matches the deposit
amount on your bank statement. Any payments you receive from customers can be recorded
in this holding account until you deposit the payment into a QuickBooks bank account. The
Undeposited Funds account acts as a holding account, like holding money in a drawer until
you make a deposit to your bank.

8. Save the payment.

To learn how to receive a customer payment watch this video: https://youtu.be/Vg8ayalsvK4

NOTE  You can see the customer payment balance amount in the undeposited
funds account.
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Step 3: Deposit Customer Payment

1. Click the New menu and select Bank Deposit.

2. Select the appropriate Deposit to account.

3. Select the payments to deposit.

4. Save the deposit.

To learn how to record deposits watch this video: https://youtu.be/B1eZZEK9F9U

NOTE  You will see an updated balance in the Undeposited Funds account and the
Chequing accounts after the deposit is recorded in QuickBooks.
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Sales Receipt Workflow

Use the sales receipt workflow when your customer pays you at the time of the sale. Because the
customer does not owe anything on the sale later, a customer name is optional.

Sales Receipt    Bank Deposit

Step 1: Enter a Sales Receipt

1. Click the New menu and click Sales Receipt.

2. (Optional) Choose a Customer name.

3. In the Product/Service area of the form, select the appropriate products and/or services.

4. Enter the Rate and Sales Tax.

5. Enter the Payment method and reference number (if applicable enter a #cheque).

6. Select the appropriate Deposit to account (see information about Undeposited Funds above).

7. Click Save to complete the transaction.

To learn how to enter a sales receipt watch this video: https://youtu.be/htroTl7our4

Step 2: Deposit Customer Payment

1. Click the New menu and choose Bank Deposit.

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2. Choose the appropriate deposit to account.

3. Select the payments to deposit.

4. Save the deposit.

Sales and Customer Reports

There are several default reports to help you understand the sales and accounts receivable in
your business. Choose from the following reports that provide the information you need for
your business.

Sales by Customer Detail

This report shows the total sales to each customer and job, broken down by transaction. It includes
income from parts, services, and other charge items recorded on an invoice or sales receipt. It does
not include income from sales tax or reimbursed expenses.

1. Click Reports.

2. Scroll to Sales and Customers.

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3. Click Sales by Customer Detail.

A/R Aging Summary

This report summarizes the status of unpaid invoices in the accounts receivable. For each customer
who owes money, the report shows:

• What the customer owes for the current billing period

• What the customer hasn’t paid from previous billing periods

• Subtotal balances for each job (if the customer has multiple jobs with your company)

1. Click Reports.

2. Scroll to Who owes you.

3. Click Accounts Receivable Aging Summary.

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NOTE  To see a list of the transactions that make up a balance, click any balance
amount in the report.

Open Invoice Report

1. Click Reports.

2. Scroll to Who owes you.

3. Click Open Invoices.