Creating Statement Charges in QuickBooks

There’s more than one way to bill customers for your products and services. A statement charge is one of them.

Depending on what kind of business you have, you probably have a preferred way of billing customers. If they walk into your shop and present a credit card or cash, you create sales receipts. If they order off your website, they might receive an electronic receipt. Or your arrangement may be such that you send invoices.

There’s another way that’s especially useful if your customers are responsible for paying recurring charges, like an ongoing service contract that’s billed monthly. You can enter those financial obligations directly as statement charges.

As you know, QuickBooks can create statements, summaries of a customer’s activity. These are generated automatically from the invoices, receipts, payments, and other transactions you’ve recorded over a given period of time. But did you know you can manually add charges to statements? Here’s how it works.

Creating a Statement Charge

Click the Statement Charges icon on the home page or open the Customers menu and select Enter Statement Charges. Your Accounts Receivable register appears. Open the list in the field next to Customer:Job by clicking on the down arrow and select the correct Customer:Job. 

Warning: If the item will be attached to a specific job, not just a customer, be sure you choose the correct job. QuickBooks maintains a separate register for each.

Consider creating a statement charge instead of an invoice for recurring transactions that will not be billed immediately.

Change the date if necessary and open the Item list (or click <Add New> if you haven’t created an item record yet). Select the one you want and enter a quantity (Qty). QuickBooks should fill in the rate and description. The TYPE column will automatically contain STMTCH (statement charge). Click Record when you’re done. The next time you create a statement for that Customer:Job, you’ll see the transaction you just entered.

Statement Charge Limitations

Before you decide to use statement charges, keep in mind that:

• You can’t include some information that would appear on an invoice, like sales tax and discounts. 
• Even if your charge relates to hours you worked for the customer, QuickBooks will not open a reminder window containing that information the next time you create an invoice for the customer. You’d have to Enter Time by creating a single activity or entering the hours on a timesheet. 
• You still have to bill the customers. 

Billing the Customer

There are two ways to bill customers for statement charges. You can, of course, just generate statements that include the date(s) of the charge(s). The next time you create a statement for customers who have manually-entered statement charges, it will contain them, along with any other activity like invoices and payments. 

We’ve covered statements before, but we’d be happy to go over this QuickBooks feature with you. This means you’ll have to enter a statement charge every month if it’s to be a recurring one. Instead, you can treat them as memorized transactions, so they’re automatically entered in the register. If you’re billing multiple customers for the same service every month, for example, this would work well.

First, you’ll need to create a Group that contains all of those customers. Open the Lists menu and select Memorized Transaction List. Right-click anywhere on that screen and click on New Group. This box will open.

If you regularly bill customers for the same service, like a monthly subscription, you can create a Group and memorize the transactions.

Give your Group a Name and click the button in front of Automate Transaction Entry. Open the list in the field next to How Often and select the billing interval. Choose the Next Date to indicate when this group billing should begin. If the charges should be entered on a limited basis, enter the Number Remaining. And be sure to fill in the Days In Advance To Enter if that’s applicable. Click OK.

Next, you’ll assign the customers who should be billed monthly to your Group. Click Statement Charges on the home page again to open your A/R register. Select each customer one at a time and right-click on the statement charge that you want to recur monthly, then select Memorize Stmt Charge. In the window that opens, give the transaction a new Name if you’d like (this will not affect the transaction, only how it’s listed). Click on the button in front of Add to Group and select the Group name from the drop-down list. Repeat for each customer you want to include.

Keeping Track

If periodic statements are your primary customer billing method, this system should work fine. But if you also send invoices and/or collect payment at the time of the sale, you’ll need to remember that your statement charges must be billed on a regular basis, too. We can go over your customer billing procedures with you to determine whether you’re using QuickBooks’ tools wisely – or whether some changes could improve your collection of payments.

SOCIAL MEDIA POSTS

Are you invoicing customers for recurring charges like subscriptions or service contracts? Consider using statement charges.

If you bill multiple customers for a recurring service, you could memorize those transactions as a group and automate statement charges. Find out how here.

Do you regularly send statements as customer bills? Ask us about how you could use statement charges.

Statement charges aren’t as detailed as invoices, but they may make sense for your business. We can help show you how.

5 Things You Should Know About the Chart of Accounts in QuickBooks Online

QuickBooks Online doesn’t require deep knowledge of accounting principles. Still, there are concepts you should understand.

You probably didn’t expect you’d have to become an accounting expert when you started your business. You knew you’d have to deal with recording income and expenses – maybe track your inventory and process a payroll. But you may not have understood just how complex financial bookkeeping could be.

That’s why you decided to use QuickBooks Online, or are at least considering it. The service is an expert on accounting, and it simplifies the process. It knows exactly how you have to document transactions to stay compliant with the rules that accountants and other businesses follow. This is good practice, and it’s absolutely necessary if, for example, you ever have to apply for financing.

One of the features of accounting systems you should understand is the Chart of Accounts. You won’t have to alter it in any way—in fact, we strongly advise against it—but you’ll encounter it when you work with transactions. Here are five things you should know about it.

What is it?

These three columns from QuickBooks Online’s Chart of Accounts display account Names, Types, and Detail Types.

QuickBooks Online’s Chart of Accounts is a list of financial categories that are used to classify your company’s transactions when you record them. If you were doing your accounting manually, you would have to create your own Chart of Accounts. But QuickBooks Online builds one for you based on the company type and industry you choose when you’re setting up the site.

Why is the Chart of Accounts important?

Some people refer to the Chart of Accounts as the “backbone” of your company file. All transactions flow to it. Its primary importance can be summed up in one word: reports. Your reports will not be accurate if your Chart of Accounts is poorly constructed or if you categorize transactions incorrectly. This becomes as issue when you want to:

• Prepare taxes. Your income tax return will not reflect your reportable income and deductible expenses if transactions are not assigned to the right classifications.
• Apply for financing, take on an investor, sell your company, etc.
• Monitor your finances. You won’t get a true picture of your income and expenses, which makes it difficult to analyze your company’s fiscal health and plan for the future.

What’s in the Chart of Accounts?

There are two types of accounts. One contains information that’s used in the Balance Sheet report. These accounts will have a number in the QuickBooks Balance column that’s based on all transactions up to the current date. They include Assets (bank accounts, accounts receivable, inventory, etc.), Liabilities (unpaid bills, credit cards, payroll and sales taxes, loans, etc.), and Equity. 

The remainder of the accounts are used in the Profit and Loss report, otherwise known as the Income Statement. They’re divided into Income (sales, discounts given, etc.), Cost of Goods Sold (labor, shipping, materials and supplies, etc.), Expenses (advertising, insurance, payroll, etc.), Other Income, and Other Expense. You won’t see a number in the QuickBooks Balance column for these accounts because the Profit and Loss report changes based on the date range selected.

Should I ever make any modifications to my Chart of Accounts?

You can set up bank and credit card accounts in QuickBooks Online’s Chart of Accounts.

As we stated earlier, we strongly recommend that you never modify your Chart of Accounts without consulting us. However, there are two exceptions to this. You’ll want to create entries for your bank and credit card accounts. To do this, first open the Chart of Accounts by clicking the gear icon in the upper right and selecting Chart of Accounts under Your Company. When it opens, click New in the upper right corner. Choose Bank or Credit Card and fill in the blanks.

Do I need to use account numbers in the Chart of Accounts?

Generally, the smaller the business, the less need there is for this. If your business is big enough that you have dedicated A/P and A/R individuals, you may want to post transactions to account numbers.

Understanding Reports

QuickBooks Online makes it possible for you to view the Chart of Accounts and those two critical reports, Balance Sheet and Profit & Loss. Customizing and analyzing them, though, is something you should do under professional supervision. We’re happy to help here and in other advanced areas of the site. Contact us for a consultation.

SOCIAL MEDIA POSTS

QuickBooks Online’s Chart of Accounts is the “backbone” of your accounting. If you don’t understand what its purpose is, we can show you.

Do you know how QuickBooks Online’s Chart of Accounts is used in transactions? Find out how here. We can help you understand this.

You can create bank and credit card accounts from QuickBooks Online’s Chart of Accounts, but you shouldn’t change anything else there. Find out why here.

Did you know QuickBooks Online creates a Chart of Accounts for you when you set up your company file?  Find out more here and let us know if we can help you make any necessary changes.