Making FreshBooks work with QuickBooks and vice versa

Part 1: Dealing with Income

QuickBooks is an accounting application and FreshBooks is an invoicing application. They are two different things, but in the end to have your data matching in both, there could be a ton of double entry resulting in valuable time consumed and strenuous effort.

You can have your data accurate in both, while not matching in both. Matching and accuracy are two different things. For all of the numbers to match up, it is a matter of accuracy. To have all of the details such as sales items etc. it would be a matter of matching.

In this blog post, I will begin to show you ways to get accurate data from FreshBooks into QuickBooks.

Method 1: Getting Receivables as a whole into QuickBooks

This method is ideal if:

• You do not need to track the accounts receivable balance by client inside of QuickBooks, but want to track your accounts receivable as a whole.
• Have no issues with documenting your invoicing on a monthly basis inside of QuickBooks.
• Are okay with entering your payments received on invoices, once the payments are actually received from your customers.

Note: I offer this as an option, because maintaining who owes you what in QuickBooks is not that big of a deal, because you track that same data inside of FreshBooks. However, tracking your accounts receivable total is necessary for some companies, such as accrual based entities.

Step by Step Instructions:

1. Log into your FreshBooks Account

2. Click on the Reports Tab

3. In the second column, click on the Revenue by Client report

4. Select the year that you want to report on, highlight all clients, select total billed, and then click View Report.

5. Open QuickBooks

6. Set up a generic or general client in your Customer Center. My general client is called ‘FreshBooks Receivables’ (If you don’t know how to do this, visit my blog post on setting up a customer in QuickBooks)

7. Click on Company in the main menu bar and then Make Journal Entries

8. Select the end date of the month you are going to be recording sales, for this example we will be doing January 2010. So I would enter the date of January 31, 2010.

9. From the account drop down pick your Income account (mine is Accounting Services Income).

10. Tab over (or move with your mouse) to the credit column and enter your sales total for the month you are entering. You will get this information from the Revenue Report that you previously generated from FreshBooks, it is your total at the bottom for the month in question.

11. Go to the second row and from the account drop down box select your accounts receivable account and in the debit column enter the same amount (in most cases QuickBooks will automatically fill in that amount for you).

12. Tab over to the Name column and enter your general client name that you set up in Step 6.

13. Check to make sure that your entry looks similar to this:

14. Press Save and Close

What has happened now is you have your entire month income inside of QuickBooks. You should be able to see that the balance exists for your general client, and see the revenue reported in your Profit & Loss Statement.

You are not done yet! When you receive payments from your customers on these open invoices, you have to record this in QuickBooks. This is easy though:

15. Get a notification from FreshBooks that you have received a payment.

16. Open up QuickBooks

17. Click on Customers & then Receive Payments from the main menu.

18. Pick your general customer name in the Received From field, enter the amount received, the payment method, the date it was received, and then in the Memo line, I like to personally leave the real clients name and invoice number.

19. Click Save and Close.

20. Don’t forget to deposit your money in the Banking -> Make Deposits menu, all customer payments are automatically stored in Undeposited funds in recent versions of QuickBooks (in some older versions, you could pick the account you want it deposited to at the received payments screen).

Method 2: Getting Receivables on a per client basis into QuickBooks

This method is ideal if:

• You want track the accounts receivable balance by client inside of QuickBooks.
• Have no issues with documenting your invoicing on a monthly basis inside of QuickBooks.
• Are okay with entering your payments received on invoices, once the payments are actually received from your customers.

It is the same process as outlined above in method 1, with the following changes:

1. In Step 6 you will either want to skip this step or set up your actual clients name if they are not already in QuickBooks.

2. In Steps 10 and 11 you will only enter the amount for the specific client in that month, rather than the total revenue.

3. In Step 12, rather than entering the ‘general clients’ name, you would enter the specific name of the client.

4. In Step 18, rather than picking the ‘general clients’ name, you would select the specific name of client from whom you received payment.

It should be noted that with this method you will have to do an individual entry for each client, as QuickBooks does not permit combined General Journal Entries involving accounts receivable and multiple customer/client names.

In my opinion: It is not necessary to record things as in method 2, because you are already maintaining client specific accounts receivable information in FreshBooks. Entering your data as outlined in method 1 will assure your data is accurate, just not identical as it relates to client specific invoices and balances.

Before you pick one method over the other, I want to state that there are more ways than just these and I will be outlining them in upcoming blog posts.

Some of you may not want to have to enter your accounts receivable (the invoicing) and the payments received (the money received), this is especially applicable to cash based reporting companies, whose income is only income once the payment is actually received. So, rather than having to enter all the invoicing totals and then payment receipts, you can enter just payment totals. There are several ways that this can be done. Stay tuned and I will outline them in an upcoming blog post.