Invoicing is the foundation of getting paid in any business. For small business owners using QuickBooks Online, issuing accurate invoices and monitoring customer balances ensures smooth cash flow and helps prevent payment delays. In this post, we’ll walk through the process of creating and managing invoices, setting payment terms, and using built-in tools to monitor receivables.
Creating Invoices in QuickBooks Online
QuickBooks Online makes it easy to create professional-looking invoices. You can customize them, add your branding, and send them directly to your customers via email.
To create a new invoice:
• Click on ‘+ New’ from the left navigation panel.
• Select ‘Invoice’ under the Customers section.
• Choose the customer from the dropdown list or create a new customer on the spot.
• Enter the invoice date and due date.
• Add products/services, quantities, rates, and any applicable sales tax.
• Customize the message or add notes if needed.
• Click ‘Save and send’ to email the invoice or just ‘Save and close’ to send later.
Setting Payment Terms and Due Dates
Establishing payment terms upfront helps customers understand when payment is expected. You can set default terms for each customer (e.g., Net 15, Net 30) and customize them per invoice if needed. QuickBooks Online automatically calculates the due date based on the terms you set, reducing confusion and helping you keep track of aging receivables.
Enhancing Invoices with Custom Fields and Attachments
You can add custom fields to track internal details like project names, PO numbers, or job phases. Attachments such as contracts, receipts, or proof of delivery can be included to give your client all relevant documentation.
Tracking Open Invoices and Managing Customer Balances
Once invoices are sent, it’s crucial to track which ones have been paid, partially paid, or remain outstanding. QuickBooks Online provides several built-in tools for this:
• Accounts Receivable Aging Report: Shows outstanding balances grouped by how long
they’ve been overdue.
• Customer Balances Summary: Provides an overview of total receivables per customer.
• Sales > Invoices Tab: Lets you monitor status (e.g., sent, viewed, overdue, paid).
Following Up: Payment Reminders and Customer Statements
To improve collections, you can use QuickBooks’ automated reminders. These can be set up to notify customers when invoices are nearing due or overdue.
To send a reminder manually:
1. Go to ‘Sales’ and select ‘Invoices.’
2. Locate the unpaid invoice and click the dropdown in the ‘Action’ column.
3. Choose ‘Send reminder.’
You can also send customer statements showing all unpaid invoices. This is especially helpful for customers with multiple outstanding bills.
Common Mistakes to Avoid
• Skipping invoice creation and only recording deposits — this causes income to be overstated
or misclassified.
• Using Sales Receipts instead of Invoices when payment is not immediate.
• Not linking payments to invoices, leading to duplicate income entries or open balances.
• Forgetting to update payment terms, resulting in incorrect due dates.
Conclusion
Issuing clear, timely invoices and following up consistently are key to keeping your cash flow
healthy. With QuickBooks Online, these tasks are streamlined so you can focus on running your
business. By understanding how to manage invoices and customer balances, you gain better
visibility into your income and outstanding receivables.
Please Note:
• QuickBooks Online has different versions (e.g., Simple Start, Essentials, Plus, Accountant). Some features or menu labels may vary slightly depending on your subscription level.
• QuickBooks Online is regularly updated by Intuit. Features, menu labels, and workflows described in this post may change over time. Always refer to the latest guidance within your QuickBooks account or consult a professional for current information.
If you require additional assistance with QuickBooks, please feel free to contact us.