How To Mark An Invoice As Paid In QuickBooks Online

QuickBooks Online (QBO) is an easy-to-use cloud-based accounting software designed to help businesses manage their financial transactions, including invoicing and payments. If you’ve received a payment from a customer, marking the invoice as paid is essential for accurate bookkeeping. This guide will walk you through the process of marking an invoice as paid in QuickBooks Online.

1. Log into QuickBooks Online

1. Open your web browser and go to the QuickBooks Online login page.
2. Enter your login credentials (email and password).
3. Click “Sign In” to access your QuickBooks Online account.

2. Navigate to the Sales Section

Once you’re logged into QuickBooks Online:

1. On the left-hand menu, click on the “Sales” tab.
2. This will expand a submenu where you’ll find several options like Customers, Invoices, and Payments. Choose Invoices to view a list of all your invoices.

3. Locate the Invoice You Want to Mark as Paid

You can now search for and find the specific invoice that you want to mark as paid.

1. In the Invoices tab, you’ll see a list of all invoices, including their statuses (Open, Overdue, Paid).
2. You can filter by status or use the search bar to find a specific invoice by:
   
   • Invoice number
   • Customer name
   • Amount due
3. Once you locate the invoice, click on the invoice number to open the details.

4. Click on “Receive Payment”

To mark the invoice as paid, QuickBooks Online provides a “Receive Payment” option.

1. When you open the invoice, click on the “Receive Payment” button located at the top-right corner of the invoice page. This will take you to the Receive Payment screen, where you can record the payment.

5. Enter Payment Details

In the Receive Payment screen, you’ll need to fill in the payment information. Here’s what you need to do:

1. Customer: Ensure that the correct customer is selected in the Customer field. QuickBooks Online will automatically populate this field based on the invoice you opened.
2. Payment Date: Verify that the Payment Date is correct. If needed, change the payment date to match when you received the payment.
3. Payment Method: From the Payment Method dropdown, select the method used by the customer to make the payment. You can choose from:
   Cash
   Check
   Credit Card
   • Bank Transfer
   • Other Payment Methods (depending on what you’ve set up in QuickBooks)
4. Amount Received: QuickBooks Online will automatically fill in the Amount Received field with the full outstanding amount on the invoice. If the customer paid only a partial amount, you can adjust this amount manually.
   
5. Deposit To: Select the account where the payment was deposited (for example, your bank account or cash account).
6. Reference No. (optional): If the payment was made via check or another traceable method, you can enter the reference number (e.g., check number or transaction ID).
7. Message on Receipt (optional): If you want to add a custom message to the payment receipt, you can enter it in the Message on Receipt field (e.g., “Thank you for your payment!”).

6. Apply the Payment to the Invoice

After entering the payment details:

1. In the Outstanding Transactions section, you will see the invoice that the payment is being applied to. Ensure that the payment is being applied to the correct invoice.
2. If the customer has more than one open invoice, QuickBooks will display all open invoices under the customer’s name. You can check the boxes next to the invoices to which the payment should be applied. If this is a full payment, QuickBooks will automatically apply the payment to the full outstanding amount on the invoice.
3. Adjust the Payment Amount if necessary, especially if it is a partial payment. QuickBooks will automatically reduce the balance on the invoice based on the payment amount.

7. Save the Payment

Once the payment details are confirmed and applied to the invoice:

1. Click on the “Save and Close” button to save the payment and close the window.
   • If you want to record another payment for the same customer, click Save and New to keep the window open and move on to the next transaction.

8. Verify the Invoice Status

Now that the payment has been recorded, you can verify that the invoice status has been updated:

1. Return to the Invoices list under the Sales tab.
2. You should see the status of the invoice updated to Paid (if the full payment has been received) or Partially Paid (if the payment was partial).
3. You can also open the invoice again to confirm that the payment has been applied correctly. The Payment section should show the payment amount and the method used.

9. Send a Payment Receipt to the Customer (Optional)

If you want to send a receipt to your customer confirming the payment:

1. In the Receive Payment window, after saving the payment, you can choose to send the receipt by email. Look for the Email Receipt option.
2. A pop-up window will appear with an option to email the payment receipt. You can edit the subject or message if needed, and then click Send.

Alternatively:

• You can also go to the Customer Center and select the customer’s name. Under Transactions, you’ll see the payment you just recorded. Click on it, and you’ll have the option to email the receipt.

10. Reconcile the Payment (Optional)

If you’re reconciling your bank account in QuickBooks Online, it’s important to ensure that the payment is reflected in your bank transactions:

1. Go to the Banking tab on the left-hand menu.
2. Choose the bank account where the payment was deposited.
3. Review the transactions. You should see the payment you just recorded as part of your deposit.
4. If the payment is missing, you can manually add it or match it with an existing bank feed transaction.

Conclusion

Marking an invoice as paid in QuickBooks Online is a straightforward process that helps you maintain accurate records of customer payments. By following these steps, you can easily apply payments to invoices, track balances, and ensure that your financial records are up-to-date.

Additionally, QuickBooks Online allows you to email payment receipts to customers and reconcile payments with your bank accounts, making it a comprehensive tool for managing both payments and invoicing.

If you have multiple payment methods or use different bank accounts for deposits, make sure to keep your records organized to ensure smooth reconciliation.