How Does Accounts Receivable Financing Work?

A bank loan isn’t the only way you can finance your business’s operations. There are alternative financing options available, one of which is accounts receivable financing. If your business uses invoices to collect payments from its customers or clients, you can use accounts receivable financing. With that said, you might be wondering how this alternative financing method works exactly.

The Basics of Accounts Receivable Financing

Accounts receivable financing involves tapping into your business’s unpaid invoices for financing. There are private financing companies that specialize in accounts receivable financing. They will either buy your business’s unpaid invoices — typically at a slightly lower rate than their face value — or they will loan you money using your business’s unpaid invoices as collateral.

Under the former option, you’ll obtain money by selling unpaid invoices to a private financing company. The financing company will essentially buy your business’s unpaid invoices. Under the latter option, you’ll obtain money in the form of a loan by using your business’s unpaid invoices as collateral. You’ll still have to pay back the loan, but you’ll get immediate cash that you can use to finance your business’s operations. There are the two basic methods used for accounts receivable financing.

Advantages of Accounts Receivable Financing

Many businesses struggle to collect payments from their customers or clients. With accounts receivable financing, you don’t have to waste time or resources trying to collect payments. You can simply sell the unpaid invoices to a private financing company.

Accounts receivable financing is also faster than traditional financing methods, such as bank loans. It can take well over a month for a bank to approve your business for a traditional loan. In comparison, private financing companies may approve your application for accounts receivable financing in just a few weeks. If your business is in dire need of immediate cash, accounts receivable financing can be an attractive choice for this reason.

Disadvantages of Accounts Receivable Financing

Accounts receivable financing, of course, is only an option if your business uses invoices. If customers or clients pay upfront, you won’t be able to use this alternative financing method.

If you intend to sell your business’s unpaid invoices, it’s important to note that you won’t get the full value for them. Private financing companies make money by buying unpaid invoices at a lower value.

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How to View the Transaction Journal in Quickbooks

Business-related transactions often consist of multiple debits and/or credits. When using Quickbooks, however, you can look at all the debits and/or credits associated with a transaction. Quickbooks features a Transaction Journal that’s designed specifically for this purpose. It provides more information about transactions that’s not available simply by viewing the transactions themselves.

What Is the Transaction Journal?

The Transaction Journal is a report in Quickbooks Desktop that contains detailed information about your business’s recorded transactions. According to Intuit, it was originally designed to help professional accountants with their daily accounting tasks. The Transaction Journal revolves around the dual-entry accounting method. Whether you’re a professional accountant or a business owner, though, you can take advantage of the Transaction Journal to gain a better understanding of your recorded transactions.

Using the Transactional Journal, you’ll have an easier time finding transactions that have an incorrect balance. You can also use the Transaction Journal to identify erroneous entries for your recorded accounts.

How to View the Transaction Journal

You can view the Transaction View in one of several ways. After accessing the transaction screen for an invoice, receipt or other transaction, click the “Reports” option under the transaction toolbar and choose “Transaction Journal.” From here, you’ll see all the debits and credits associated with the open transaction.

You can also view the Transaction Journal by clicking the “Reports” menu under the main “Reports” menu and choosing “Transaction Journal.”

Because it’s such a popular feature, Quickbooks has a keyboard shortcut available for the Transaction Journal. If you’re using a Windows PC, press the Ctrl+Y keys. If you’re using an Apple Mac, click the Cmd+T keys. Performing the appropriate keyboard shortcut will automatically launch the Transaction Journal.

Breaking Down the Transaction Journal

When viewing the Transaction Journal, you’ll notice several different options. There’s the “Accrual only” option, which is designed to show the total value of all posts associated with the transaction. There’s also the “Current form” option, which is designed to only show the transaction form without any additional information like dates. You can also choose the “Customizable” option when viewing the Transaction Journal,” which as you may have guessed, allows you to customize the Transaction Journal with various information. Other options available in the Transaction Journal include “Sort order,” “Non-posting” and “Source & targets.”

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What Are ACH Payments in Quickbooks?

Offering a limited number of payment options is a surefire way to harm your business’s sales revenue. If a customer doesn’t see his or her preferred payment method listed, the customer may look elsewhere for a product or service to buy. You can expand your business’s payment options, however, by enabling ACH payments in Quickbooks. Quickbooks supports ACH payments, and when compared to credit card payments, they have a significantly lower processing fee.

The Basics of ACH Payments

An acronym for “Automated Clearing House,” ACH is a type of bank-based payment. It’s used to send and receive money between two bank accounts. Assuming both banks support ACH payments, one account can send money to another payment. The sending bank will initiate the ACH transfer, and assuming all the details are correct, the receiving bank will accept it.

Benefits of ACH Payments

ACH payments offer several advantages, one of which is ease of tracking. Since ACH payments are processed between the two respective banks, they create a digital paper trail. You don’t have to worry about keeping track of receipts. Rather, each ACH payment will be automatically recorded in your bank account.

Perhaps the greatest benefit of ACH payments is their low cost. You’ll incur relatively high processing fees with credit card and other traditional payment methods. ACH payments, on the other hand, have substantially lower processing fees. Some banks even support free ACH payments for their customers. Regardless, your business will save money when accepting ACH payments from customers as opposed to other payment methods.

Using ACH Payments in Quickbooks

If a customer wants to pay for your business’s goods or services using ACH, you’ll need to enter his or her bak information. This is done by selecting the “Enter Bank info” option, at which point you can complete the fields for “Account Number,” “Account Type,” “Routing Number” and “Name.” It’s a good idea to tick the option for “Use this account information in the future,” so that Quickbooks will save the customer’s information.

You’ll also need to acquire authorization from the customer to receive his or her ACH payment. To do this, choose the “signed authorization” option, which should print an authorization form that you can provide to the customer. After the customer has signed and returned the form, select the option for “I have signed authorization.” Finally, click the “Save” option to complete the process.

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What Is Multicurrency in Quickbooks and How Does It Work?

Does your business have a multinational presence? If so, you’ll probably receive payments in foreign currencies. Some customers may pay in USD, whereas others may pay in a different currency. When using Quickbooks, you can track and record all types of currencies using a feature known as Multicurrency.

Overview of Multicurrency

Multicurrency is a feature in the Quickbooks accounting software — both desktop and online versions — that allows you to track multiple currencies. When enabled, you can assign the appropriate currency to various accounts, including customers, vendors, banks, credit cards, accounts receivables, accounts payable and more. When you record a transaction from one of these accounts, Quickbooks will automatically use your specified currency.

How to Turn on Multicurrency

You can turn on Multicurrency by logging in to Quickbooks and clicking “Preferences” under the “Edit” menu on the home screen. From here, you should see an option for “Multiple Currencies.” Clicking this option will bring up a new set of options. You can then click the “Company Preferences,” followed by “Yes, I use more than one currency.” Finally, select your home currency under the drop-down menu. Once complete, save your changes to finish the setup. Multicurrency should now be enabled in your Quickbooks account.

Using Multicurrency: What You Should Know

With Multicurrency turned on, you can now assign the appropriate currency to your business’s customers, vendors or other accounts. Keep in mind, however, that you’ll have to create a new profile for each account. All your existing accounts will automatically use your specified home currency.

To assign a new currency to a customer, click the “Customers” menu on the home screen and select “Customer Center.” Next, choose “New Customer:job” in the “Customer Center.” You can then select the “New Customer” option. To assign a currency to the customer, simply choose the currency from the drop-down menu of available options. When finished, click “OK” to complete the process.

You’ll probably encounter some new fields after activating Multicurrency. Quickbooks, for example, will create a “Currency” field that shows up in your Chart of Accounts. The “Currency” field contains a list of your added currencies. You’ll also see a “Bank and Credit card registers” account, which shows up in payment headings. This field denotes the currency used for the respective payment.

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How to Pay Sales Tax in Quickbooks

Does your business collect sales tax from its customers? With the exception of Alaska, Oregon, New Hampshire, Delaware and Montana, most states have a predetermined sales tax. It typically ranges from 2% to 6%, meaning you’ll have to charge customers this additional amount on top of the products or services that they purchase. After collecting sales tax, though, you’ll need to send it to your state’s tax agency. Quickbooks can help you pay sales tax by providing all the necessary records.

Steps to Paying Sales Tax in Quickbooks

To pay sales tax in Quickbooks, go to the homepage and choose “Sales Tax” under the “Vendors menu,” followed by “Pay Sales Tax.” Under the “Pay From Account” menu, choose the bank account from which you want to pay the sales tax. Keep in mind that you’ll only see your business’s bank accounts listed under this menu. You won’t see credit card or other financial accounts.

Next, double-check the field labeled “Show sales tax due through” to ensure it’s correct. If the date is wrong, you’ll need to change it before proceeding to the next step. You should also use this opportunity to double-check the “Starting Check No.” field. This field represents the check number for which you’d like to pay the sales tax.

In the main section, you’ll see a list of all your business’s sales taxes as well as the tax organization for which they are due. Each line in the main section should list an item, vendor (tax organization), amount due and amount paid.

Finishing Up

If all the information looks correct, you can pay your business’s sales tax by clicking the “Pay All Tax” button. This option will pay all the sales taxes your business owes as indicated in the main section. With that said, Quickbooks doesn’t require you to pay sales tax in full. You can make partial payments by clicking the “Amt Paid” cell and entering your desired payment amount.

You can also choose to print or write checks for sales tax payments. To do this, click the box labeled “To be printed,” at which point Quickbooks will place a checkmark in it. To complete the process, click the “OK” button. Quickbooks will then either process your payment or print out the documents so that you can manually pay your sales tax.

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An Introduction to Undeposited Funds Accounts in Quickbooks

You don’t have to manually deposit each customer’s payment into your business’s account. Assuming you use Quickbooks, you can take advantage of the accounting software’s undeposited funds feature. With this feature, you can group payments together, allowing for faster and more efficient deposits. What is undeposited funds exactly, and how does it work?

What Is Undeposited Funds?

Undeposited funds is a feature in Quickbooks that allows you to combine, as well as hold, multiple payments before depositing them into your business’s bank account. Depending on the type of business that you operate, you may receive dozens or even hundreds of payments per day. Instead of depositing each of these payments into your business’s account separately, you can deposit them all simultaneously as a group by using undeposited funds.

Why should you use undeposited funds exactly? Normally, banks don’t group deposits together. For instance, if you deposit three $400 payments — meaning three customers paid you $400 each — your business’s bank would record the transaction as a single $1,200 deposit. As a result, you’ll have to combine the payments in Quickbooks so that it matches the transaction recorded by your business’s bank. Undeposited funds allows you to do this by grouping the payments together.

Getting Started With Undeposited Funds

To get started with undeposited funds, log in to Quickbooks Desktop and click the “Edit” menu, followed by “Preferences.” You can then click the “Payments” option under the menu to access the “Company Preferences” tab. You should now see an option for “Use Undeposited Funds as a Default Deposit to Account.” Assuming this option is blank, click the box to add a checkmark to it. When finished, click the “OK” button to save your changes.

You can now use the undeposited funds feature to group multiple payments together. This is done by clicking the “Create Sales Receipt” on the homepage of Quickbooks Desktop, followed by selecting a customer under the”Customer” menu. Under the “Deposit to” menu, choose “Undeposited funds.” Quickbooks will then prompt you to enter information about the deposit. After entering all the necessary information, click either “Save & Close” or “Save & New” to complete the process.

Keep in mind, undeposited funds is available in Quickbooks Online as well. The steps required to set it up are slightly different than that of Quickbooks Desktop, but the feature works the same nonetheless.

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How to Use the Quickbooks Auto Data Recovery Feature

When using Quickbooks Desktop, you may come across a feature known as Auto Data Recovery. As the name suggests, it’s designed to help you recover lost data. If your company file becomes corrupted, for instance, you may not be able to open it. Even if you are able to open it, the company file may only contain some of your recorded data. You can often restore lost data, however, by taking advantage of the Auto Data Recovery Feature.

Getting Started With Auto Data Recovery

To get started with Auto Data Recovery, open the folder on your computer or device that contains your company file. If you aren’t sure where your company file is located, you can find it by accessing the “Product Information” link. After locating the folder, open it and look for a file with the .tlg extension.  Next, copy and paste this file into a new folder with the name “QBTest.”

Launching Auto Data Recovery

You can now proceed to launch Auto Data Recovery. On your computer or device, find and open the folder named “QuickbooksAutoDataRecovery.” Next, right-click the file named “.QBW.adr” and delete the extension (.adr). You can then open the company file that is stored in the “QuickbooksAutoDataRecovery” folder.W

After loading your Quickbooks company file, click the “File” menu and choose “Utilities,” followed by “Verify Data.” This will automatically scan your company file for corrupted data. If there’s a problem with the file, Quickbooks will attempt to repair it and, therefore, recover any lost data.

Preventing Data Loss in Quickbooks

While the Auto Data Recovery feature is useful for recovering lost data, it’s still somewhat time-consuming to perform. You can usually prevent instances of data loss, though, by regularly backing up your company file. Quickbooks supports both automatic and manual backups. You can schedule automatic backups by accessing the “File” menu, followed by “Back Up Company” and then ‘Create Local Backup.” After following the on-screen instructions, Quickbooks will automatically create a backup of your company file on the specified date.

To perform a manual backup, go back to this section of Quickbooks and choose “Local Backup.” You will then have the option to manually create a one-time backup of your company file. Whether you use automatic or manual backups, it will allow you to roll back your company file to a previous data, thereby restoring lost data.

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The 4 User Roles Supported By Quickbooks Payments

Do you use Quickbooks Payments to accept payments from your business’s customers? If so, you should familiarize yourself with the four following user roles. Quickbooks Payments makes it easy to accept payments. It offers credit card, debit card and ACH bank transfer payments. There are multiple user roles supported by Quickbooks Payments, however, each of which has a different level of privileges. As a result, you’ll need to give your employees an appropriate user role. Below are the four primary user roles from which you can choose when using Quickbooks Payments.

#1) Full Admin

The user role with the highest level of privileges is Full Admin. Full Admin users have unrestricted access to Quickbooks Payments. They can add new users as well as delete existing users. When using Quickbooks Payments, you’ll need at least one Full Admin user. Otherwise, you won’t be able to add or delete users.

#2) Limited Admin

The user role with the second-highest level of privileges in Quickbooks Payments is Limited Admin. Limited Admin users can perform all the tasks as their Full Admin counterparts with the exception of accessing account profiles. In other words, they can’t edit or otherwise modify the details of merchants.

#3) Full User

Full user, as you may have guessed, is the user role with the third-highest level of privileges in Quickbooks Payments. They are restricted from accessing the account and user management sections in Quickbooks Payments.

#4) No Access

Finally, No Access is a user role that doesn’t have access to the Quickbooks Payments service center. According to Intuit, the No User role should be assigned to GoPayment users.

Quickbooks Payments User Roles: What You Should Know

It’s important to note that the four aforementioned user roles are used exclusively for Quickbooks Payments. Quickbooks offers other features with user roles, but they involve different user roles.

You’ll also have the option of changing user roles at any time. This is done by logging in to Quickbooks Payments as a Full Admin user and choosing “Accounts,” folloed by “Users.” You should then see a list of all users created in your Quickbooks Payments account. Simply click the “Role” link next to the user for whom you’d like to change. After selecting the desired user role, save and close to complete the process. The respective user will now have the appropriate user role.

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Business vs Company: What’s the Difference?

The terms “business” and “company” are often used interchangeably when discussing commercial entities that make money by selling products or services to customers. In reality, though, businesses and companies are different. While they both seek to generate profits through sales, they use a different structure. As a result, their nuances between the way in which they operate as well as how they are taxed. To learn more about the differences between businesses and companies, keep reading.

What Is a Business?

A business is a commercial entity or organization that makes money by selling products or services to customers. Businesses come in all shapes and sizes. Some of them are operated by a single person, whereas others are operated by hundreds of people. Some businesses produce the goods they sell, whereas others simply act as the middleman by purchasing and reselling goods from a vendor. Regardless, all businesses are commercial entities that make money by selling products or services.

What Is a Company?

A company, on the other hand, is a commercial entity or organization that’s legally separated from its owner or owners. Like businesses, companies make money by selling products or services. They can also vary in size, with some of them being operated by a single person and others being operated by multiple people. The difference is that companies are considered a separate legal entity from their respective owners.

Breaking Down the Differences Between Businesses and Companies

A company is essentially a type of business. There are several specific types of companies recognized by the Internal Revenue Service (IRS), some of which include a limited liability company (LLC), an S corporation and a C corporation. All companies are considered separate legal entities from their respective owners, meaning they don’t share liabilities or debts.

The term “business” can refer to a company as well. It’s a broad term that encompasses all types of commercial entities. With that said, businesses cover basic entities that, unlike companies, aren’t considered separate legal entities. A sole proprietorship, for example, isn’t a separate legal entity. If a sole proprietorship incurs debt, the owner or owners will be personally responsible for paying it. This in stark contrast to companies, which offer protection to their owners from company-related liabilities and debts.

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How to Reconcile an Account With a Zero-Dollar Balance

Have you tried to reconcile an account in Quickbooks, only to discover that its beginning balance is $0? Reconciliations are a routine part of accounting. By performing them, you’ll be able to match your recorded transactions to those listed in your bank accounts. If an account has a $0 beginning balance, though, you’ll have to jump through a few hoops to perform a reconciliation.

Why Accounts Have a $0 Beginning Balance

An account may have a $0 beginning balance for any number of reasons. Maybe you forget to enter the beginning balance when initially setting up the account, or perhaps your company file was damaged in a way that deleted the data. Regardless, you’ll need to recreate the account’s beginning balance before you can reconcile it.

How to Recreate the Beginning Balance

To get started, click the “Company” menu in the main Quickbooks home screen and select “Make General Journal Entries.” Next, select the statement date associated with the beginning balance. You can then choose the account from the drop-down menu labeled “Account.”

After following these steps, you should see a field for “Debit.” In this field, you can enter the beginning balance for the account. Before saving and closing this screen, click the option for “Opening Balance Equity.”

Perform a Basic Reconciliation

Now that you’re recreated the account’s beginning balance, you can perform a reconciliation. This is done by clicking the “Banking” menu and choosing “Reconcile.” Under the drop-down menu for “Account,” select the account that you want to reconcile. You will then need to enter a statement date as well as an ending balance, both of which must correspond with the account’s journal entry. When finished, click “Continue.”

You should see a field for “Deposits and Other Credits.” In this field, choose the appropriate journal entry. You can then proceed by clicking “Reconcile Now.” Quickbooks will then initiate the reconciliation process by comparing the account to your banking data.

Keep in mind that you can also undo previous reconciliations. If an account has a $0 beginning balance because of an improper reconciliation performed in the past, you may want to undo it. This is done by creating a backup of your company file, after which you can choose the option for “Undo Last Reconciliation” in the reconciliation window. Quickbooks will then delete the changes made by the last reconciliation.

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