Tag Archives: QuickBooks desktop accounting software

Record Credit Card Surcharge

Credit cards and other electronic payments (e.g. PayNow or bank transfer) are payment methods used these days among businesses, especially during the COVID pandemic. It won’t be easy to prepare documents and get the authorised signatory when working from home. Electronic payment, on the other hand, is convenient. The accountant can arrange the payment remotely, and the management or business owner can do the approval seamlessly online. Going digital does improve productivity.

Although electronic payments are convenient, it comes with a price. Usually, there is an annual fee for using the electronic payment service and a surcharge on each transaction.

PayNow and Giro will be easier to manage than a credit card. PayNow and Giro charges are usually shown in the bank statement separately from the amount received from the customer, whereas the credit card only remits the net received. Besides, special promotions or cashback will also sometimes add to the complexity of accounting.

Assume the credit card charge is 3.5% on each transaction. The surcharge incurred will be $35 based on a $1,000 invoice. That is, you received $965 instead of $1,000 if the customer paid via credit card.

How to record the payment received from the customer?

Try not to use the discount feature in the Receive Payment transaction of the QuickBooks Desktop for surcharges incurred when the customer paid via credit card (unless you are not sending the monthly statement to the customer). The QuickBooks discount feature is for a sales discount given to the customer, not surcharges or bank fees associated with the payment.

Discounts and Credits in the QuickBooks Receive Payment

A sales discount is a discount given to the customer to accelerate payment. Assuming the payment term of an invoice is 30 days. The customer enjoyed a 5% sales discount if they paid before the invoice was due. A sales discount is to encourage early payment and ease the cash flow.

The surcharge incurred shows as a ‘Discount’ on the statement if you used the discount feature in the Receive Payment transaction for credit card charges. It will be odd to see a discount and confusing.

QuickBooks Statement

A better way is to hold the payment received in the undeposited fund account. Since the credit card company will remit to you a few days later (depending on your arrangements with the finance company) and the customer has indeed paid in full, holding the fund in the undeposited fund account could be a better option.

Record deposit.

After receiving the payment into the undeposited fund account, use the Record Deposit feature to transfer the fund received (less the surcharge) to the ledger bank account when the financial company transfer the money to your bank. The net amount shown in the ledger bank account will facilitate the reconciliation later.

Alternatively, you can deposit multiple transactions at one go if you find that recording deposits one at a time is tedious. Follow the credit card statement, select those transactions from the Record Deposit window, and deposit them with all the surcharges added up into a single line. Although this method is faster, you need to spend more time reconciling; and the credit card statement will be the supporting document.

Journals behind the transaction.

If you use the discount method for a surcharge in the receive payment transaction, the journal behind debits both surcharge expense and bank and credit the receivable account.

The journals behind the two transactions in the undeposited fund method:
Receive Payment:
Debit Undeposited fund
Credit Accounts receivable

Record Deposit
Debit Surcharge
Debit Bank
Credit Undeposited fund

Although either method gives the correct ledger, I would prefer using the undeposited fund to the discount method since the statement format is my concern and the accounting flow is clearer.

Reset QuickBooks invoice sequence number

In our previous post, we mentioned resetting the invoice sequence number for the new year.

Invoice number has to be unique and sequential.

Both QuickBooks Desktop and QuickBooks Online do not have a system preference to set the invoice running sequence. If you prefer to have a yearly sequence number for †he invoices (e.g. IN20-10001 for the year 2000 and IN21-10001 for 2021), you can overwrite the invoice number when entering the first invoice in 2021. The subsequent invoice will follow the new order until you reset it again.

Reset QuickBooks invoice number
Reset QuickBooks invoice number

The same concept applied when switching from a manually invoicing system or another computerised accounting system to QuickBooks. You enter the first invoice with your preferred invoice number, and the next invoice generated will then follow the new sequence. And, of course, you can continue with your existing running sequence. Example: the last invoice entered in your old accounting software is 4321, you enter the first invoice in QuickBooks as 4322, and the next invoice number generated from QuickBooks will continue as 4323 automatically.

There are some differences between the Desktop and Online version. Some features in QuickBooks Desktop may not be available in the Online version. Consider sign up a trial or attend a demo if you have been using QuickBooks Desktop for years and thought of switching over to the online version.

How to duplicate a template in QuickBooks?

Software: QuickBooks Desktop accounting software

A template is a preset document; a document with your company logo, fields and align according to your business requirement. You can customise template such as invoice, credit note, sales order, etc. from the template wizard under the Lists menu of the QuickBooks accounting system. Besides adding new, duplicate from the existing template is another option to quickly creating a set of templates for your business.

QuickBooks Duplicate Template

Highlight the template, click the template button at the bottom of the template list window and select duplicate to create a duplicate copy. Then, open the duplicated copy and rename or amend the fields accordingly. That’s it, done!

QuickBooks Template Type

QuickBooks 2020 Desktop accounting software is available. Contact us if you like to upgrade.