I was in the middle of my audit busy season when the partner at the small, local firm where I worked insisted that I go to a client's office to help her with a QuickBooks problem. I certainly didn't welcome the added stress that this caused me; I was drowning in a sea of audits already and I didn't know QuickBooks well at all.
I finally relented and went to the client's office â her home office to be exact. The client showed me the company's accounts receivable (A/R) aging and pointed out that there were several customers showing zero balances and she didn't know how to clear them (see example below).
I must admit, I had no clue how to fix this. While the client stepped away from the room to tend to other things, her cat jumped onto the desk and watched as I panicked. I didn't know how to fix it, and I'm allergic to cats!
I did what every well-trained CPA did back then and I pressed the F1 key for help. To my amazement, the guidance in the help menu showed me exactly what to do. By the time the client walked back into the room, I told her that I knew how to fix the problem. I still had to deal with my allergies to her very friendly cat, but at least I wasn't panicking anymore.
Fast-forward 15 years and I am now a QuickBooks expert. I'll share with you the very first QuickBooks trick I learned: how to clear zero balances in the QuickBooks A/R aging.
Why QuickBooks Shows Zero Balances in A/R
Zero balances show up in the A/R aging in QuickBooks because of:
- Unapplied credit memos
- Unapplied journal entries
- Unapplied payments
In other words, the invoice shows up as unpaid even though there is a credit memo, journal entry, or payment in QuickBooks because these unapplied transactions are not linked or applied to the invoice.
Reports Affected When QuickBooks Shows Zero Balances in A/R
The A/R aging is not the only report affected. The A/R aging detail, as well as open invoices, customer balance details, and other A/R reports, are also impacted.
This is confusing to clients because QuickBooks shows that the customer balance is overdue even though it is not (see example below).
How to Fix Zero A/R Balances in QuickBooks Online
Here is the fastest way to fix the zero balance in the A/R aging in QuickBooks Online:
Step 1: Go to the Customer Center, find the customer name, and click to open the customer file.
Step 2: Next, find the invoice that is showing as overdue and click Receive Payment.
QuickBooks Online will open the Receive Payment window and automatically apply the invoice to the unapplied transaction.
Step 3: Be sure to review it just in case and select the correct transaction if necessary. The amount of the transaction should be zero.
Step 4: Click Save and Close.
The customer's balance now shows up correctly and the invoice shows as paid.
How to Fix Zero A/R Balances in QuickBooks Enterprise, Premier, and Pro
Let's assume that a journal entry was recorded to write-off an A/R balance. The balance in the A/R aging now shows zero (see example below):
Step 1: Go to Customer > Receive Payments. Enter the customer name.
You will notice the invoice and the unapplied credit balance as indicated below.
Step 2: Click on Discounts and Credits to apply the unapplied credit balance to the invoice.
The Discounts and Credits window will open. The corresponding credit balance will be automatically checked in QuickBooks.
Step 3: Be sure that it's the correct amount in case there are other unapplied credit balances.
Step 4: Click Done.
The Customer Payment window will now show the credit balance applied to the invoice. The total amount of the Customer Payment should be zero.
Step 5: Click Save and Close.
The A/R balance for this customer will now be correct and the A/R aging report will not show a zero balance.
Regardless of the version of QuickBooks that you use, this fix doesn't affect anything for accounting purposes â it only clears out the zero balance from the A/R aging and related A/R reports.
Needless to say, my client was delighted that I cleaned up her A/R aging. I hope that you will use this trick to impress your client with your QuickBooks smarts.
About the author:
Veronica Wasek is an Advanced Certified QuickBooks ProAdvisor, a CPA, a public speaker, and a member of the national Intuit Trainer/Writer Network. Veronica is the founder of VM Wasek CPA LLC, a QuickBooks-centric firm specializing in customized QuickBooks set up, training, clean up, consulting, and bookkeeping. Veronica's blog, http://5MinuteBookkeeping.com, provides tips, videos, and tutorials for small businesses to get their bookkeeping done in as little as five minutes a day using QuickBooks Online.