PAYMENTS WITH CREDIT CARDS
When you accept credit card payments from customers, you are temporarily transferring the collections for that payment to your merchant services processor.
So, you will be recording sales today for the product or service provided to your customer but you will not receive actual cash (money in the bank) until your merchant services processor has successfully collected the money from the customer and transferred that money to your bank account. Depending on your processor's terms, weekends, and bank holidays this process may take anywhere from 1 to 5 business days.
Depending on your preferred workflow, there are, typically, three accounting approaches to mapping the credit card tenders processed on your Point of Sale to your accounting system.
The main accounting point to bear in mind is that Shogo will be posting an expected deposit to your accounting system and you will separately record the actual deposit when it clears your bank statement - either via the QuickBooks bank feed functions or via manually recording deposits in QuickBooks.
Payments/Tenders Mapping Approaches:
1). Map directly to a bank account in QuickBooks
Pros: Allows you to have a direct audit trail and matching function of the expected deposit to the actual deposit.
Cons: If there is not an exact match between the expected deposit and the actual deposit, you will need to manually resolve the difference. You are also temporarily overstating your bank account balance in QuickBooks which could lead to bank overdrafts if you are relying on the QuickBooks reported balance when paying any bills or planning for any banking direct debits.
2). Map to the QuickBooks Undeposited Funds account
Pros: Allows you to have a direct audit trail and matching function to the actual deposit. Addresses the timing difference discussed in Method 1.
Cons: If there is not an exact match between the expected deposit and the actual deposit, you will need to manually resolve the difference. For QuickBooks Online, there is currently an issue with Undeposited Funds and the matching function in that QuickBooks Online assumes that the expected deposit will always be greater than or equal to the actual deposit. In the case, for example, where your merchant services processor nets their fee from the deposit, the matching function will not work and it is cumbersome to resolve these scenarios.
3). Map to an Other Current Asset Clearing Account such as "Due from Merchant Services"
Pros: The closest approach to a "set it and forget it" workflow. Expected deposits are booked by Shogo into the clearing account as they are recorded in your Point of Sale and Actual deposits are cleared out of the clearing account when the actual deposit reported on your bank statement is processed. This approach also allows you to precisely gauge the amount of money you will have coming into the bank in the near term from your processor.
Cons: You are shifting the audit trail process from a transaction based process to a balance based process. This can be a pro and con - the pro being that you only need to look deeper into your transactions whenever the balance veers from its expected amount; the con being that it could take you longer to find and resolve if you have not verified your account balance for some time. For reference, the "expected" balance in this account should always equal your most recent credit card sales for which you have not yet been paid.
Toggle all Credit
Once you have determined which approach to take, you can then set your credit card tenders to group or not, so as to more closely match the expected deposits with how your processor will eventually make the actual deposit.
Credit Card tender types (tender types that will be part of a merchant services processor batch) may be grouped together in whole or in part or mapped individually. To group, select the Toggle All Credit option and map the All Credit Cards line. Then, if you still wish to have a specific tender type create its own line, simply map only that line.
The above configuration would produce the following entry:
Mapping each credit card type individually would result in the following entry:
Mapping all credit card types only would result in the following entry: