Handling Credit Card Processing Fees Using a Bank Account
One method that gives you control over your credit card receipts is to create a clearing account as a Bank Account in Big Business to which you deposit the full amount of each Receive Money. As these funds are captured and deposited in batches you can transfer to the appropriate Bank Account the net amount of the deposit.
Issues such as discounts, processing fees, any delay imposed by your merchant service, and so on, can be easily managed. Since in effect you maintain an "account" with your merchant service, the ability to reconcile this account may benefit you. (3191)
Create a clearing account using the Bank Card tool that you specify the Bank Account Type as "Checking ", which creates a Current Asset. Using a Bank Account Type of Credit Card will create a Current Liability, which should only be used for Credit Card accounts where you are the cardholder (except in the case of a debit card, which is really a checking account).
Record Receive Money transactions (credit card captures) in their face amount and deposits (settlements) in the correct total.
As funds are deposited to a real bank account (usually a day or two later), record a Transfer between your credit card clearing account and your deposit account, in the net amount (less credit card discount). The remaining balance in the credit card clearing account can then be used to "pay" a Bill from the processor, or Balance Adjusted out of the account, as you see fit.
Record Receive Money transactions (credit card captures) in their face amount and deposits (settlements) in the correct total.
As funds are deposited to a real bank account (usually a day or two later), record a Transfer between your credit card clearing account and your deposit account, in the net amount (less credit card discount). The remaining balance in the credit card clearing account can then be used to "pay" a Bill from the processor, or Balance Adjusted out of the account, as you see fit.
You use the Receive Money window to record payments and apply them to invoices. Unlike the Invoice window, where you can receive payments only for the current invoice, the Receive Money window allows you to work with payments from different customers and to apply a single payment to several invoices.
Most of the time, you receive payments for items you have sold to customers. On some occasions, however, you may receive payments from other sources--refunds, for example. You also use the Receive Money window to record these payments. See "Receiving Miscellaneous Payments," later in this section, for information.
Receiving a payment from a customer consists of several interrelated steps?choosing the customer, entering payment information, and applying the payment to invoices. You can optionally add comments with special information about the transaction.
If you need to see bookkeeping information, click the Posting Information button in the window. See "Viewing Payment Posting Information," later in this chapter, for details.
When you save the Receive Money window, the payment amount is credited to the Undeposited Funds account specified in the Banking Preferences window. You need to use the Deposit window (available through the Banking toolbar) to deposit the funds. See "Making Deposits" in Chapter 6 for details.
Most of the time, you receive payments for items you have sold to customers. On some occasions, however, you may receive payments from other sources--refunds, for example. You also use the Receive Money window to record these payments. See "Receiving Miscellaneous Payments," later in this section, for information.
Receiving a payment from a customer consists of several interrelated steps?choosing the customer, entering payment information, and applying the payment to invoices. You can optionally add comments with special information about the transaction.
If you need to see bookkeeping information, click the Posting Information button in the window. See "Viewing Payment Posting Information," later in this chapter, for details.
When you save the Receive Money window, the payment amount is credited to the Undeposited Funds account specified in the Banking Preferences window. You need to use the Deposit window (available through the Banking toolbar) to deposit the funds. See "Making Deposits" in Chapter 6 for details.
Entering Customer and Payment Information
Entering Customer and Payment Information (6468)
You choose the customer in the Payment Received From field. When you choose the customer, basic information about the customer's open invoices appears in the Apply Payments To Invoices list at the bottom of the window. You use several different fields to enter payment information:
• Enter the amount of the payment into the Amount field. The amount you enter appears in the Unapplied field in the middle of the window. The unapplied amount decreases as you apply the payment to invoices.
• Choose the payment method in the Payment field.
• Optionally enter a check or other transaction number in the Reference Number field.
• Enter the amount of the payment into the Amount field. The amount you enter appears in the Unapplied field in the middle of the window. The unapplied amount decreases as you apply the payment to invoices.
• Choose the payment method in the Payment field.
• Optionally enter a check or other transaction number in the Reference Number field.
A payment from a customer is usually in response to an invoice from you. To record that a payment for an invoice has been received, you apply the payment to the invoice. Applying a payment reduces the open amount by the amount of the received payment.
It's possible to receive a payment without applying it to an invoice. The payment will reduce the customer?s open amount, but unpaid invoices will continue to affect the overall balance due.
Using the Apply Payments To Invoice list, you can apply payments to invoices in two different ways:
• If you click the Auto Apply button, the payment is automatically applied starting with the oldest invoice. If the payment is larger than the open amount of the old- est invoice, the remainder is applied to the next oldest invoice. This pattern repeats until the entire payment amount is applied. This can result in partial payments of invoices. For example, suppose you have two invoices. The older one has a balance of $700 and the newer one a balance of $600. A payment of $1,000 would completely pay off the older invoice and partly pay the newer, leaving it with an open amount of $300.
• If you prefer to distribute payment amounts yourself, you can enter the amount you want to apply to each open invoice into the Applied column. For example, if you receive a payment that you don't want to apply to the oldest invoice, you can enter the amounts in the Applied column of the newer invoices.
It's possible to receive a payment without applying it to an invoice. The payment will reduce the customer?s open amount, but unpaid invoices will continue to affect the overall balance due.
Using the Apply Payments To Invoice list, you can apply payments to invoices in two different ways:
• If you click the Auto Apply button, the payment is automatically applied starting with the oldest invoice. If the payment is larger than the open amount of the old- est invoice, the remainder is applied to the next oldest invoice. This pattern repeats until the entire payment amount is applied. This can result in partial payments of invoices. For example, suppose you have two invoices. The older one has a balance of $700 and the newer one a balance of $600. A payment of $1,000 would completely pay off the older invoice and partly pay the newer, leaving it with an open amount of $300.
• If you prefer to distribute payment amounts yourself, you can enter the amount you want to apply to each open invoice into the Applied column. For example, if you receive a payment that you don't want to apply to the oldest invoice, you can enter the amounts in the Applied column of the newer invoices.
To Receive Money from a Customer
To Receive Money from a Customer (6470)
To receive money from a customer:
1. Click the Receive Money tool in the Customer toolbar.
2. Choose the customer.
3. Enter payment information.
4. Apply the payment to open invoices.
Payments aren't recorded until the Receive Money window is saved. After entering information for a customer payment, save your work with the button. If you don't save, your work will be lost. (If you want to enter another payment, save your work with the button.)
1. Click the Receive Money tool in the Customer toolbar.
2. Choose the customer.
3. Enter payment information.
4. Apply the payment to open invoices.
Payments aren't recorded until the Receive Money window is saved. After entering information for a customer payment, save your work with the button. If you don't save, your work will be lost. (If you want to enter another payment, save your work with the button.)
Viewing Payment Posting Information
Viewing Payment Posting Information (6471)
You can see a list of the categories applied to payment amounts. The categories used are determined in the Customer Card and the Banking Preferences window.
To view payment posting information:
• Click the Posting Information button in the Receive Money window.
To view payment posting information:
• Click the Posting Information button in the Receive Money window.
Receiving Miscellaneous Payments
Receiving Miscellaneous Payments (6472)
Your business may sometimes receive payments that don't result from sales--refunds, rebates, and similar payments. You use the Receive Money window for these payments, but follow a process different from the one used for customer payments.
To receive miscellaneous payments, you choose Other from the pop-up list in the upper left of the window. This displays fields you can use to enter the miscellaneous payment.
Make sure to use the button to save any payments in the Receive Money window before choosing Other from the pop-up list. If you don't save, the contents of the window will be lost when you switch.
There are three basic steps to receiving a miscellaneous payment:
• Entering who the payment is from into the Payment Received From field.
• Entering payment information. You enter this information the same way you do for customer payments. See "Entering Customer and Payment Information," earlier in this section, for details.
• Choosing the category you want to apply to the payment. You can apply more
than one category by clicking the Split button and entering the categories and amounts in the list that appears.
To receive miscellaneous payments, you choose Other from the pop-up list in the upper left of the window. This displays fields you can use to enter the miscellaneous payment.
Make sure to use the button to save any payments in the Receive Money window before choosing Other from the pop-up list. If you don't save, the contents of the window will be lost when you switch.
There are three basic steps to receiving a miscellaneous payment:
• Entering who the payment is from into the Payment Received From field.
• Entering payment information. You enter this information the same way you do for customer payments. See "Entering Customer and Payment Information," earlier in this section, for details.
• Choosing the category you want to apply to the payment. You can apply more
than one category by clicking the Split button and entering the categories and amounts in the list that appears.
Credit Card Processing Discounts
This solution offers one option for processing credit card receipts on which transaction charges are immediately applied and only the net amount is deposited to you bank account. This solution assumes that you do not use Customer Discounts Allowed in their normal capacity (i.e. giving Customers a discount for paying their invoices early, such as 2% 10 Net 30 Terms, which are due in 30 days but offer a 2% discount for payment within 10 days). See the Solutions linked below for other options
Many credit card processing services assess their charges per transaction. When you process a credit card, the discount and transaction fees are immediately applied and only the net amount is deposited to your bank account. In order for your Bank Account to accurately reflect the deposit amount, use the Discount to make the Receive Money transaction the net amount of the transaction. By setting the Default Discounts Allowed Category to your Category for credit card processing expenses (and not using it for regular Discounts) and using the option to create Receive Money transactions you can apply credit card payments easily. See other Solutions linked below for ideas on how to track credit card information for processing your captures (with online software or a terminal) in batches. (3190)
If you do not use Customer Discounts Allowed in its normal capacity (i.e. giving Customers a discount for paying their invoices early, such as 2% 10 Net 30 Terms, which are due in 30 days but offer a 2% discount for payment within 10 days), you can use it as a quick method of recording Discounts you pay for Credit Card processing.
In the Customer Prefs, select the Category for credit card fees as your Default Discounts Allowed Category. If the Account Type is anything other than Cost of Sales (e.g. Expense) Big Business will alert you that a Cost of Sales account was expected but will accept your choice. Check with you CPA if you are unsure which Account Type to specify for your credit card processing fees.
In the picture, the Invoice is for $100. A Receive Money transaction has been created from the Receipts tab on the Invoice. Clicking the Plus button (+) creates a new Receive Money transaction to be saved with the Invoice. The credit card processing fees have been manually calculated to be $3.00 and entered in the Discount field. The Applied Amount is manually entered as the new Amount Due (overriding the default $100).
When this Invoice is saved, a Receive Money transaction will be automatically created in the amount of $97.00 and $3.00 will be posted to the Category specified in the Default Discounts Allowed Category.
In the example above, the Customer's credit card information is entered in the Comment on the Receipt. Alternatively, you may want to enter the credit card information in the Invoice Comment (on the Invoice tab) depending on how you process the capture of funds. It is also a good idea to put the Invoice Number or your Approval Code in the Reference# field for future reference.
In the Customer Prefs, select the Category for credit card fees as your Default Discounts Allowed Category. If the Account Type is anything other than Cost of Sales (e.g. Expense) Big Business will alert you that a Cost of Sales account was expected but will accept your choice. Check with you CPA if you are unsure which Account Type to specify for your credit card processing fees.
In the picture, the Invoice is for $100. A Receive Money transaction has been created from the Receipts tab on the Invoice. Clicking the Plus button (+) creates a new Receive Money transaction to be saved with the Invoice. The credit card processing fees have been manually calculated to be $3.00 and entered in the Discount field. The Applied Amount is manually entered as the new Amount Due (overriding the default $100).
When this Invoice is saved, a Receive Money transaction will be automatically created in the amount of $97.00 and $3.00 will be posted to the Category specified in the Default Discounts Allowed Category.
In the example above, the Customer's credit card information is entered in the Comment on the Receipt. Alternatively, you may want to enter the credit card information in the Invoice Comment (on the Invoice tab) depending on how you process the capture of funds. It is also a good idea to put the Invoice Number or your Approval Code in the Reference# field for future reference.
To Receive a Miscellaneous Payment
To Receive a Miscellaneous Payment (6473)
To receive a miscellaneous payment:
1. From the pop-up list in the upper left of the Receive Money window, choose Other.
2. Enter who the payment is from.
3. Enter payment information.
4. Choose the financial category or categories you want to apply to the payment.
1. From the pop-up list in the upper left of the Receive Money window, choose Other.
2. Enter who the payment is from.
3. Enter payment information.
4. Choose the financial category or categories you want to apply to the payment.
Resolving Unapplied Payments
Unapplied Receive Money transactions can result in a Customer Statement with a 0.00 zero-dollar balance, indicating that they have "open" Invoices and offsetting Receive Money payments which have not been applied to their Invoices. (3167)
Big Business allows you to Receive Money from a Customer at any time. This receipt can be Deposited and even Reconciled without ever having been Applied to a specific Invoice or set of Invoices. This makes it easy to take deposits on orders, and allows you to “unapply” payment if you wish to modify an Invoice.
You may forget to apply payment without realizing until one of the following happens:
• A Statement run generates “0.00” zero-dollar statements for Customers.
• Auditing the Accounts Receivable balance yields a discrepancy.
To find Unapplied Payments:
1. From the InfoCenter toolbar or the File menu, open the Q&A tool.
2. Select Customer from the Q&A toolbar Pull-Down menu.
3. Scroll to the bottom of the Customer Q&A's.
4. Select "Which Payments were received and not fully applied?" and click the Q&A button.
To apply Unapplied Payments:
1. Open the Receive Money, by double-clicking on an item in the found list.
2. Click AutoApply or enter specific amounts in the Applied Column.
If the receipt has been partially applied, AutoApply may be unavailable.
3. When the Unapplied Amount is reduced to zero, save by clicking the OK button.
You may forget to apply payment without realizing until one of the following happens:
• A Statement run generates “0.00” zero-dollar statements for Customers.
• Auditing the Accounts Receivable balance yields a discrepancy.
To find Unapplied Payments:
1. From the InfoCenter toolbar or the File menu, open the Q&A tool.
2. Select Customer from the Q&A toolbar Pull-Down menu.
3. Scroll to the bottom of the Customer Q&A's.
4. Select "Which Payments were received and not fully applied?" and click the Q&A button.
To apply Unapplied Payments:
1. Open the Receive Money, by double-clicking on an item in the found list.
2. Click AutoApply or enter specific amounts in the Applied Column.
If the receipt has been partially applied, AutoApply may be unavailable.
3. When the Unapplied Amount is reduced to zero, save by clicking the OK button.