How to Record and Track Payments in QuickBooks

What QuickBooks "Receive Payment" Does

Receive Payment in QuickBooks is the tool you use to record when a customer pays you an invoice. It connects the money coming in to the specific invoice it pays, updates your customer's balance, and moves the payment into your bank account or other deposit location. Without using Receive Payment, QuickBooks treats the invoice as unpaid even after you've deposited the check or processed the card.

The feature works the same way whether the payment arrives by check, ACH transfer, credit card, or cash. You tell QuickBooks which invoice the payment covers, which account to deposit it into, and when it arrived. QuickBooks then marks that invoice as paid and shows the money in your chosen account.

This is different from recording a general deposit or income. Receive Payment ties the payment directly to the invoice it settles, so your reports show which customers have paid and which still owe you.

Key Takeaways

• Receive Payment records which invoice a customer payment covers and deposits the money into your chosen account.
• You can record payments by check, ACH, credit card, or cash, and QuickBooks updates the customer's balance automatically.
• Partial payments are allowed — you can record a payment that covers only part of an invoice and leave the rest outstanding.
• The payment must be linked to a customer and an invoice to work correctly; payments without an invoice should be recorded as general income instead.

How to Record a Payment in QuickBooks Online

Open QuickBooks Online and click + New in the top left. Select Receive Payment from the menu. A form will open with fields for the customer name, payment date, payment method, and amount.

Start by choosing the customer from the dropdown. QuickBooks will show all unpaid invoices for that customer below. Check the box next to each invoice the payment covers. If the payment amount is less than the total of those invoices, QuickBooks will apply it to the oldest invoice first unless you manually adjust it.

Select the payment method — Check, Credit Card, Bank Transfer, or Cash. Then choose which account to deposit the money into. If you're depositing a check into your business checking account, select that account. If the payment is a credit card transaction that will be deposited later, select your credit card clearing account or undeposited funds account.

Enter the payment date (the date the customer sent or made the payment, not the date you're recording it). Add any notes if needed, then click Save and Close. QuickBooks will mark the invoice as paid and show the payment in your chosen account.

Recording Partial Payments and Overpayments

If a customer sends less money than they owe, you can record a partial payment. Check the invoice boxes as usual, but change the amount in the Amount Received field to match what actually arrived. QuickBooks will apply the payment to the invoices you selected and leave the remainder unpaid.

If a customer overpays — sends more than the invoices total — QuickBooks will ask what to do with the extra. You can create a credit on the customer's account (which they can use toward future invoices), or you can record it as income if they're paying for something other than the invoices shown.

For payments that don't match any invoice, do not use Receive Payment. Instead, record the money as general income using the + New menu and selecting Check or Bank Deposit, depending on how the money arrived.

Choosing the Right Deposit Account

When you record a payment, you must tell QuickBooks where the money is going. For most payments, this is straightforward: a check goes to your business checking account, and a direct deposit goes to the same account. But credit card payments and some other methods need a holding account first.

If you accept credit card payments that don't hit your bank account the same day, create an Undeposited Funds account (or use the one QuickBooks creates by default). Record the payment as going into Undeposited Funds. Later, when the credit card processor deposits the money into your bank account, you'll record a bank deposit that moves the money from Undeposited Funds to your checking account. This keeps your bank account balance accurate and matches what your bank statement shows.

If you use a payment processor like Square or PayPal that deposits directly to your bank account, you can record payments as going straight to your checking account, since the processor handles the delay.

What Happens After You Record the Payment

Once you save a Receive Payment entry, QuickBooks updates three things: the invoice status changes from unpaid to paid, the customer's balance decreases by the payment amount, and the money appears in the account you selected. Your Accounts Receivable report will no longer list that invoice as outstanding.

If you need to undo a payment, open the Receive Payment entry, click the three dots in the top right, and select Delete. QuickBooks will reverse the payment and mark the invoice as unpaid again. You can also edit a payment by clicking Edit instead of deleting it — this is useful if you recorded the wrong amount or the wrong account.

Payments appear in your bank reconciliation when you reconcile your account. If you recorded the payment as going to your checking account, it should match a deposit on your bank statement. If it doesn't match, check the payment date and amount — a mismatch usually means you recorded the date or amount differently than the bank did.

Common Mistakes When Recording Payments

The most common error is recording a payment without linking it to an invoice. If you receive money from a customer but don't check any invoice boxes, QuickBooks treats it as general income rather than a payment toward what they owe. The customer's balance stays the same, and you'll have money in your account that doesn't match any invoice. Always check at least one invoice box when recording a customer payment.

Another mistake is recording the same payment twice — once in Receive Payment and again as a bank deposit or general income. This inflates your income and makes your bank reconciliation fail. If you've already recorded a payment in Receive Payment, do not record it again elsewhere.

Depositing into the wrong account also causes problems. If you record a check as going to your credit card account instead of your checking account, your bank reconciliation will fail because the money won't show up where you said it would. Double-check the account before you save.

Receive Payment vs. Other Ways to Record Income

QuickBooks offers several ways to record money coming in, and using the right one matters. Receive Payment is for money that pays an existing invoice. Bank Deposit or Check is for money that doesn't match an invoice — a refund from a vendor, a loan deposit, or income from a source other than customer invoices. Sales Receipt is for sales that don't use invoices, like a retail transaction where the customer pays immediately.

If you're unsure which to use, ask yourself: "Does this money pay an invoice I already created?" If yes, use Receive Payment. If no, use Bank Deposit, Check, or Sales Receipt depending on how the money arrived and what it's for.

Frequently Asked Questions

Can I record a payment for an invoice that hasn't been sent yet?

No. The invoice must exist in QuickBooks before you can link a payment to it. If a customer sends money before you've created an invoice, record it as a general deposit first. Once you create the invoice, you can manually adjust the customer's balance or create a credit on their account.

What if a customer pays by credit card but I don't know which account to use?

Use your Undeposited Funds account. This is a holding account for payments that haven't hit your bank yet. When the credit card processor deposits the money into your bank account, you'll record a bank deposit that moves it from Undeposited Funds to checking. If you're unsure whether your processor deposits the same day, check your processor's documentation or ask your bank.

Can I edit a payment after I've saved it?

Yes. Open the Receive Payment entry, click the three dots in the top right, and select Edit. Change the amount, date, account, or invoices as needed, then save. If you need to delete it entirely, click the three dots and select Delete.

What does it mean if a payment doesn't match my bank statement?

It usually means the date or amount you recorded in QuickBooks doesn't match what the bank shows. Check that you entered the payment date correctly (the date the customer sent it or the bank processed it, not the date you recorded it). Also verify the amount — a missing digit or decimal point is a common cause. If the payment still doesn't match after you've checked both, contact your bank to confirm the deposit was processed.