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Dan DeLong: Welcome to another workshop Wednesday, brought to you by school of bookkeeping.com, which is Casual Conversations for Serious Workflows.
But today we're gonna be we're, we're, we've, we've kind of talked a little bit last week about the whole idea of disputes and And how to, how to kind of handle that inside of, inside of [00:01:00] QuickBooks.
And we, we talked a little bit about the The new qbo, new, new payments issues that that happened. And, and we did wanna put out a little disclaimer, well, after we had talked about that last week and we kinda shared shared that we have it on a, a blog now it's come to our attention that if you are if you're doing firm build setting up qbo, well, if you're, if you're doing firm, build firm, build QBO account.
Yes. The firm Bill QBO account, so like you, you're in your QBO A and you create a, a new QBO O subscription for your client, and you are managing the billing. That situation does not create this whole process of the half created merchant account. It's only for. Companies that are direct build. I don't know if [00:02:00] that means that if you're using the direct billing method inside of qbo a right?
Like you're creating it and then giving them, you know, your, your discount, you know, your provisor discount for the, for the first year or whatever that happens to be, if that causes that. But we actually tested it yesterday with a, with a brand new trial. And so the, the, what, what ultimately happens is during the.
During the, the, the setup interview view, it, it, it asks it asks a question about, Hey, let's set up your, let's set up your invoices so you can get paid. And you don't even have to acknowledge you can even skip it. You can even skip the question. And and it's still what, what ultimately happens when you go into an invoice.
The check boxes to turn on credit card or ach, they're available to check. Right. So they're not turned on by, they're not turned [00:03:00] on by default, but they're available to check. Right. And I would assume, you know, we, we may have, may wanna dig a, dig into this a little bit deeper. I would assume that if you had answered the questions in the setup interview, yes, I get paid by credit card or yes, I get paid by by ach, that they would've been checked.
Auto automatically for you, for you, but again, that, again, that's that half set up QuickBooks online payment account where where it will send the, the invoice with the pay now button, they could potentially be you know, set, set you up you know, and collect the funds. And then it will ask you to finish the setup.
And also another thing that came up Carrie, what if they are. An industry, what if they're a gun seller? Right. Or or if they're, they're, they're selling marijuana. You know, those, those risky industries that, that aren't [00:04:00] supported with with, with a payments company. You know, cuz they haven't set up the whole, the whole account yet.
That comes after. Yeah. So what happens to the money at that point? If they are actually a company that. Doesn't, that's not supported in QuickBooks payments. Wow. Any thoughts happen there?
Carrie Kahn: We dunno. We've gotta find out this for our audience. That's a really good question. There
Dan DeLong: is money is a list. Yeah, there's a list of non-supported Payments accounts that that the that QuickBooks Payments doesn't doesn't support.
So how would they know until they've actually gone through the process of, of of applying for the merchant account. But here is this half set up situation.
Carrie Kahn: So for the, so that's for the people that are the qbo O. [00:05:00] Account holder, but the, their customers, what are they? Are they just receiving the same old electronic invoice that we mm-hmm.
We love to pay from anywhere. You could be on the beach, you could be in the bathroom, you hit pay now, and then they select ACH, your credit card, and then that money sitting somewhere until the holder of the Q B O account gives them their banking information. But I would think that they need to give industry and stuff.
I don't know.
Dan DeLong: Yeah, yeah, yeah. Cause when you, when you apply, when you apply inside of, and maybe, maybe that's what we do next week, is is actually really, you know, do a little demonstration of, of how this, how this shows up. Yes. But that would be, but you you, once, once you're at the point of the, the mon the money has been collected, then then there's a.
QuickBooks Online will then say, okay, well let's, let's finish setting up your account. The first thing is about, tell us about you, tell us about your [00:06:00] business, and tell us about your bank. You know, those, those are the things, those are the three things that they need to know in order to, to finish setting up the merchant account for them.
And that's when they're gonna say, oh, We didn't know that you were selling ammunition or, oh, we didn't know that you know, that you were, you were in the cannabis industry or, you know, any of the other, you know, high risk industries that they would prefer not to have.
Carrie Kahn: There must be some sort of a, this is what we need to learn, is what's the process when that happens is the money sits in a holding account and you've got to just reverse and give it back to the customer.
That's fun.
Cuz I know that I've seen people complaining in the interwebs about my money is trapped.
So I would imagine that they're, that they just wanna then say, oh, ew, and send it back. [00:07:00] It's probably, and then you have, you know, the customer and then all that drama, they think they paid and then they get the money back.
Dan DeLong: And then Susan brings up a good question, like, how can you give it back if you never got it?
But that would be more, well,
Carrie Kahn: Intuit would've to give it back, but then because it didn't really hit your bank account, there's no audit trail. So Yeah. Yeah. That's, that's a good question. We ask our, we'll ask our, we'll ask our reps how, what they know about that cause. Right. Yeah. I don't think it's, I don't think that, I think that this happens from time to time, but like all the process, all the apps that come through us, most of 'em, we, we rarely hit those industry no-nos.
It's 1%. So they probably, they've gotta, you know, there's gotta be a system, but I think they just go, Ew, and send it back. Send that dirty money back. [00:08:00]
Dan DeLong: That would be, That's probably the case. We'd hope so that they would be, you know, forthcoming. But it, it's a, it's a, it's a mess, right? When that sort of thing is, has happened, it's like you know, you, you drove over the tire strip at the parking garage and now you need, I need my tires and there's tires, tire, yeah.
Fees. Yeah. You end up with some severe tire damage here.
Carrie Kahn: Yeah, I, yeah, that would be it. We do, we do need to, Put a pin in that idea and see what, what that really means. Because like Susan pointed out, it didn't hit your bank account, so you really can't follow the audit trail. And we've had customers that have said, wait a minute, we didn't want payments.
Now what? But I'm like, well, you got the money, can finish it out and get paid. And then, I don't know, cancel. But once you see how easy it is to use, it's sort of you're, you're not really cutting edge if you don't offer that electronic invoicing. So it is the way of the [00:09:00] future. I absolutely love when someone sends me an e, an invoice.
I love when I go to lunch with my friends and I owe someone money, boop, if they don't have Venmo set up, I'm lost. Are you kidding? I have to. I've had friends that say, write me a check. No, no, no. Set up some electronic, PayPal, Venmo apple Pay, I don't know. Make it so I can dump the money back to you and I don't owe you anything.
Cause I don't wanna carry cash. Alright.
Dan DeLong: Carrie cash. That sounds like a a, a new currency. With the, yeah, if we can get some Carrie
Carrie Kahn: Kahn Cash I'm really cashless. I'm usually cashless. Carrie. I don't have it in my wallet, so. Right. A pick, pocket pick. Pocketer would be very disappointed. Looking for cash. Me.
Dan DeLong: So our original topic was gonna be about issuing refunds.
We got sidetracked talking about, that's what we do last, last
Carrie Kahn: week conversation. [00:10:00]
Dan DeLong: But let's you know, so I mean, tailing off of Susan's you know, how do you give it back, right? So we wanted to talk about refunds, right? So when you are when you've collected money from, from someone electronically depending on the method of, of how you've collected it will determine how you give it back, right?
When there's money movement happening over over electronic means, right? Digital, digital transaction of, of, of funds if it's a bank transaction, it's that, that, that falls into one bucket and then there's credit card transactions, which which falls into, into another.
So when you have charged a, a credit card or, or received money with, with a credit card, the money has to go back on the same card that it was, that it was collected on. Right? You cannot, right. You cannot, and
Carrie Kahn: today I want Amex [00:11:00] tomorrow, MasterCard,
Dan DeLong: right? That is that falls under the money laundering bucket.
So, so there has to be you know, a, a, a record of the original transaction in order for it to go back to the, the, the same card. So when you're doing it inside of, inside of QuickBooks QuickBooks Online has this concept of a refund receipt where where QuickBooks Desktop has a credit memo and then a subsequent refund given that, so it's a two step process in, in desktop, whereas QuickBooks Online has a refund receipt, which is an equal and opposite type of transaction of a sales receipt.
You're putting in the the items that were, that were sold so that the revenue and, and the income is reversed, right? Based off of the, the refund. And then the money actually going back is, is initiated through, through the [00:12:00] refund receipt. Whereas QuickBooks on desktop is more of create the credit memo and then it will ask you, are you giving the money back, right?
Because there could potentially be two things when, when people are, are canceling their, their sale, right? Carrie, it's a, you know, you could just leave it as a credit. On their, on their account and then apply that to them without giving the money back, you know? And that's, that's typically the, the preferred way to give money back because you're, you would like a future sale to, to offset that, right?
Carrie Kahn: Yeah, definitely. But that doesn't always happen. I mean, if you say, you know, 60 day money back guarantee, you have to stand behind that and. And do it the way that Intuit wants you to do it, which makes sense. We don't wanna be money laundering for sure. It does get tricky though, that we need to point out when they use ach.
It's not, it's not that, yeah, easy. You can't, you can't, you're not hitting the undo button. Like I love to hit in Excel [00:13:00] and Sheets and Doc and there's no und undo button with ach. It's, what's the process, Dan? In
Dan DeLong: the world of, yeah. So the, the, the, the challenge is, is that ACH has a different set of rules, right?
Because normally with the, with the bank transfer it's, there's usually there's, there's time involved, right? So it's when, when it's a c h when you charge somebody by ach, you're pulling money from the bank. There's a, there's a, there's a time, you know, to take two days to get to Get to the the source, right?
Or the destination I should say. And it's not like you can just reverse that, right? And just you know, and that's what the you know, the refund receipt and being able to process a refund on a credit card will actually do, because it are, it sees the, the original transaction and is able to, to [00:14:00] offset that.
So credit cards are, ACH is more. Yeah, ACH h is more of like a one-way thing, right? It's a, you can't go back. You can't go back just like on a one-way street. You really shouldn't be driving the wrong way and
Carrie Kahn: those things backing up into going to rent your car and then you're like, I forgot to tell the guy at the booth this, and you hit the, you hit the reverse in your car.
You can't do that with ach. Nope. Right.
Dan DeLong: Yeah. Today's Danalogies are all about cars. So we've got tire tracks and we've got one-way street. So you can't you can't drive on on the opposite direction of a one-way. Well, I mean, you can, but only before,
Carrie Kahn: or somebody comes.
Dan DeLong: Right. So, so with ACH you have to go down another one-way street, right?
So you would have to create either, [00:15:00] you know, write a check or send your own a ach. Yeah. In order to send the money, what called
Carrie Kahn: qbo? Because in desktop you create a credit memo for step one.
Dan DeLong: Right. You would. I mean, I, I think the, the, the, the best option is just going into your, into your bank and, and using Zelle or, you know, some other method of, of being able to initiate that money, transfer back to them, you know, sending it via PayPal or, you know, right.
You have to figure out a way to get the money back to back. You can't use, you can't use the the merchant service to be able to do that with a small exception. And I haven't actually seen it. I've seen it work and maybe Susan can, can, can chime in because she knows knows about it. So in the Merchant center when you go into when you have a QuickBooks Payments account, you have, you have access to a merchant [00:16:00] center, right?
Right. Where you can see all your transactions. You could run run reports and see the deposits. It'll show you the breakdown of the deposit to help you reconcile those things. And And in the merchant center, there's a way to process a refund. And then eChecks is one of those, one of those options.
Now, I have not seen I've not seen an ACH show up in there to to, to give it back because there was this whole check processing service with regards to the QuickBooks payments accounts. That was kind of like an add-on service where you could. Kind of like scan, you know, the old, the old days when you actually could take checks or when you did take checks, you know, the, the check scanning little thing.
You know what I'm talking about, Carrie? Mm-hmm. Where they like run the, run the check through and then it actually approves, approves the check. I don't think ACH falls into that [00:17:00] category, but I, I've, I've heard conflicting stories where like, if I have done an ach transaction, I could feasibly go into the merchant center, find the the ACH transaction and refund it that way, but that is more of a check.
That, that was my impression of what that. Ach, or I'm sorry, the, the eCheck reversal was, is that if you actually processed a check transaction, not an ach transaction. Oh. Susan says you haven't had to try that, so that's always a good thing when you haven't had to give money back. You don't
Carrie Kahn: like giving money back.
But it happens.
Dan DeLong: But I've, I've, I've, it, it's in there and I've heard conflicting stories about. Being able to use that for, for ach refunds. So it's not,
Carrie Kahn: it's not intended for, it's not intended for an ach h refund. It's, it's basically if you receive a check and you're [00:18:00] like taking a photo of it and depositing it, that can be returned.
Yeah.
Dan DeLong: Okay. Right. But you know, I don't know. I don't know how it would show up in there. If you haven't actually. Process through the, the check processing. There used to be, you know, a, a little check scanner hardware device Yes. For, for QuickBooks Desktop that you could, you know, use to, you know, receive checks that way.
But you know, these days with mobile deposits and those types of things, they may have just been a service. They probably kinda died off there.
Carrie Kahn: Yeah, I think you're right. I think it's, I, I bet you this is caught in that same thing, like we just figured out the gun says in cannabis. Okay. It's one of those little teeny weeny things that they just didn't intend to continue with that because like you say, I could take a picture of a check and deposit it right in my account.
So there's really no need for them to. [00:19:00] Keep the development on that. Right. And we have workarounds
Dan DeLong: and regardless regardless of that, if you do anything inside the merchant center that only affects the, the reality of the money movement, right? You still need to go into QuickBooks and account QuickBooks, how you've given the money back.
Good point. So one, one of the other things I wanted to point out about about giving refunds is , when you're running reports inside of QuickBooks on a cash versus accrual basis, and you've used, let's say you're on a cash basis and you've used an accrual based transaction, like an invoice, right?
Mm-hmm. Ultimately, ultimately QuickBooks, will it. When it comes to the QuickBooks reality of an invoice based on a cash trans cash reporting basis it's only gonna show the revenue and whatnot based off of whether that invoice has been paid, right? [00:20:00] So that's, that's the caveat, you know, the fundamental truth, right?
Of the of the reporting things when when you're using an accrual type of transaction of. Invoice versus a separate event of getting paid on it later. So when you're giving money back you want to use the opposite transaction of what you did use, right? So, right. What a lot of people tend to do sometimes is go into the invoice and put in that they've given money back on the invoice, or maybe they've exchanged, you know, like, Hey, this, this shirt didn't fit.
I would like to get. I would like to get this shirt instead. So they'll go into the original invoice and put in what they've been return, what they're returning as a negative, and then, you know, put whatever is being exchanged as, as a positive. That's a, that's a bad idea.
Carrie Kahn: Don't touch, leave [00:21:00] the, leave the integrity of that data behind the alone and create a second
Dan DeLong: transaction.
So what what do you, what do you feel like, like why is that, why is that a bad idea to do that? Well, you wanna, I have my own opinions about that
Carrie Kahn: or they're deleted from, so I mean, so when you reconcile, you want basically all the transactions to match up with your bank and you want your QuickBooks to reflect that.
So that's a separate transaction. You don't want to, it kill the integrity of the original transaction. I mean, you can copy that and just click that invoice and say, credit this back, and it. Pulls in the same item codes, and then you can refund how you can refund using a check. But that gives the two transactions and then you can bring in that deposit just like it came in and then that outgo is on the right date and that keeps you reconciled to the bank.
Otherwise, it just, it kind of kills the integrity of your file and your workflow. Right.
Dan DeLong: And then [00:22:00] the other, the other aspect of that is that the way QuickBooks handles negatives on accrual based transactions on a cash basis is terribly confusing, right? Because if you are using a negative on the original transaction, then QuickBooks determines that as a payment.
Right. So it, it, it has to go, okay, well this is a pa this is this negative, you know, has to be a payment. So if you've got five other line items on that particular transaction, and this negative only applies to say 33% of the of the, of the total sale, then QuickBooks has to go through and go. 33% of this returned item needs to be applied to these five items proportionately.
So then looking at that original invoice on a cash basis report, it's gonna look terribly confusing because it is applying those that, that [00:23:00] negative return proportionately upon, among, amongst the positive ones. So I've, I've, I've received tons of calls about that, where it's like I don't understand where this number's coming from because.
This isn't on the, this isn't on the original sale, this isn't on the original invoice. And then come to, come to find out like, oh, there's a negative, there's a discount line item, or there's there's a return item, a negative on a, what it would expect to have a positive receipt does get very confusing on a cash basis.
So best best practice is to use a. Credit memo and then apply because those are positives, right? So all of the credit memos are positives. They just have the opposite effect of, of the invoice. And then when you apply that to the invoice, then QuickBooks gets a little bit better when it comes to, you know, calculating and keeping those two things separate.
Yeah.
Carrie Kahn: And if you, if you [00:24:00] created an invoice and you said Yes you can return it. And basically you're creating a credit memo for that invoice. You, you know, then that's the full amount. But let's, and then you could just sit that on account and what you could do, let's say you're like, I have a return restocking fee.
I need to cover my fees. Then you would want to offset by creating a fresh invoice for that date to put in those fees, and then you can apply the credit memo to it and refund them the difference. You don't wanna give away the farm if they've, if it's your fault, give away the farm. If not, then you need to make sure you're covering, you know, your overhead for the painful workflow to refund.
Cuz I want it to be mine. I don't wanna give it back. Yeah, yeah.
Dan DeLong: That's that's what, that's what Susan says mine, which is, I agree you Susan, my money, my
Carrie Kahn: right. So we put a credit memo on [00:25:00] file. Nine is
Dan DeLong: 90% of the law.
Carrie Kahn: So yeah, so you want to make sure in all of you know, if you reverse that invoice, you're not accounting for any other fees you wanna charge for this high drama situation.
Dan DeLong: All right, so next week I think we'll actually try you know, do a little demo of this this process of new QBO o new payments accounts and how people see what's going on, get, get themselves into, into trouble. And so hopefully you can join us next week on on another workshop Wednesday.
And we appreciate you joining us this week. And y'all have a great week.
