How to Set Up Customers in QuickBooks Online

Introduction

Setting up customers in QuickBooks Online is essential for managing sales transactions, invoices, and payments. Whether you're a new business or transitioning from another system, having your customers accurately recorded in QuickBooks helps streamline your billing process, track sales, and manage your cash flow efficiently. This guide will walk you through the steps to properly set up customers in QuickBooks Online, ensuring that your business stays organized and your financial records remain accurate.

Step 1: Access the Customers Section

1. Log in to QuickBooks Online: Start by logging into your QuickBooks Online account.
2. Navigate to the Sales Section: In the left-hand navigation menu, click on Sales.
3. Go to Customers: Under the Sales menu, click on Customers. This will take you to the Customer Center, where you can view, add, and manage your customers.

Step 2: Add a New Customer

2.1: Manually Add a Customer

1. Click New Customer: In the Customer Center, click the New customer button in the upper-right corner.
2. Enter Customer Information:
   • Customer Name: Enter the customer's name or the business name.
   • Email: Input the customer's email address to send invoices or receipts digitally.
   • Phone Number: Add the customer’s phone number for easy contact.
   • Billing Address: Include the customer’s billing address to ensure that invoices are correctly formatted.
   • Terms: Select payment terms, such as Net 30, Net 60, or custom terms, which define when the invoice payment is due.
   • Opening Balance: If the customer has an outstanding balance when you're setting them up in QuickBooks, enter this under Opening balance and include the date of the balance.
3. Additional Details: If you need to track other customer details, such as tax-exempt status or preferred delivery method (email or mail), you can add this information in the appropriate fields.
4. Save the Customer: After entering all required information, click Save to add the customer to your records.

2.2: Import Customers from a CSV File

If you have a list of customers in a CSV file, QuickBooks allows you to bulk upload customer information to save time.

1. Go to Import Data: Click on the Gear icon in the top-right corner and select Import Data.
2. Choose Customers: From the list of options, select Customers to start the import process.
3. Upload CSV File: Browse and select your CSV file containing the customer details.
4. Map the Fields: QuickBooks will prompt you to map the columns from your CSV file to the corresponding QuickBooks fields (e.g., Customer Name, Email, Phone, etc.). Ensure each field is correctly mapped.
5. Review and Complete the Import: After mapping, QuickBooks will show you a preview of the data. Review the data to ensure it’s accurate, then click Import to add your customers in bulk.

Step 3: Organize Customers with Sub-customers (Optional)

If your business deals with larger clients that have multiple departments or branches, QuickBooks Online allows you to set up sub-customers. This helps you track transactions for each division separately while still reporting on the overall parent customer.

1. Create a New Sub-customer: In the Customer Center, click New customer.
2. Enter Sub-customer Details: Fill in the relevant details for the sub-customer, including name, email, and phone number.
3. Link to Parent Customer:
   • Check the box labeled Is sub-customer.
   • Select the parent customer from the drop-down list.
4. Track Payments Separately: Choose whether to bill the sub-customer individually or roll up the transactions to the parent customer.
5. Save the Sub-customer: Once all information is entered, click Save to finalize the sub-customer setup.

Step 4: Manage Customer Information

Once your customers are set up, you can easily manage and edit their information as your business relationship evolves.

4.1: Edit Customer Details

1. Select the Customer: In the Customer Center, click on the customer’s name to open their profile.
2. Edit Information: Click the Edit button in the upper-right corner to modify customer details, such as contact information, payment terms, or billing preferences.
3. Save Changes: After making changes, click Save to update the customer’s profile.

4.2: Merge Duplicate Customers

If you discover duplicate customer records in QuickBooks Online, you can merge them to maintain a clean customer list.

1. Identify Duplicate Customers: Locate the duplicate customer profiles in the Customer Center.
2. Rename One Customer: Open the profile of one of the duplicate customers and rename it to match the exact name of the customer you want to keep.
3. Confirm the Merge: When you rename the customer, QuickBooks will prompt you with a message asking if you want to merge the two profiles. Confirm the action, and QuickBooks will combine all transactions under the single customer.

Step 5: Create Transactions for Customers

5.1: Create an Invoice

1. Go to + New: Click + New and select Invoice under the "Customers" section.
2. Select the Customer: Choose the customer from the drop-down list.
3. Add Products or Services: Enter the products or services sold to the customer, including quantity, rate, and tax.
4. Verify Payment Terms: Ensure that the payment terms are correct, reflecting when the payment is due.
5. Save and Send: Once the invoice is completed, click Save and send to email the invoice directly to the customer.

5.2: Record a Payment

1. Go to + New > Receive Payment: When the customer makes a payment, go to + New and select Receive Payment.
2. Select the Customer: Choose the customer who made the payment.
3. Apply Payment to Invoices: Select the invoices being paid and enter the payment details (amount, payment method, and deposit to account).
4. Save the Payment: Once the payment is recorded, click Save and close to finalize the transaction.

Step 6: Monitor Customer Balances and Reports

QuickBooks Online offers several built-in reports to help you track your customers’ balances, overdue payments, and overall sales performance.

6.1: Run the A/R Aging Summary Report

1. Go to Reports: Navigate to the Reports section in QuickBooks Online.
2. Search for A/R Aging Summary: This report shows a summary of all outstanding customer balances and the length of time the balances have been overdue.
3. Review Overdue Invoices: Use this report to follow up on overdue invoices and improve your cash flow by collecting payments more promptly.

6.2: Run the Customer Balance Detail Report

1. Go to Reports > Customer Balance Detail: This report provides a detailed breakdown of each customer's transactions, including invoices, payments, and credits.
2. Track Customer Transactions: Use this report to review a customer's entire transaction history and reconcile their outstanding balance.

Best Practices for Managing Customers in QuickBooks Online

1. Regularly Update Customer Information: Keep customer profiles updated with the latest contact details and payment terms to avoid communication issues and delayed payments.
2. Track Invoices and Payments Closely: Use QuickBooks’ automated reminders and reports to follow up on overdue invoices and keep cash flow moving smoothly.
3. Use Sub-customers for Complex Relationships: For businesses that deal with multiple departments or divisions under the same customer, use sub-customers to keep transactions organized and report on sales effectively.
4. Run Reports Regularly: Periodically run customer-related reports, such as A/R Aging and Customer Balance Detail, to stay on top of your customer accounts and ensure accurate tracking of outstanding payments.

Conclusion

Setting up and managing customers in QuickBooks Online is essential for smooth invoicing, payment tracking, and financial reporting. By following the steps outlined in this guide, you can efficiently add new customers, organize customer profiles, and manage their transactions. Regularly reviewing customer balances and reports will help you maintain healthy customer relationships and ensure timely payments, improving your business’s cash flow and financial management.