You will notice that when you set up ContractorTools to sync with QuickBooks, you will only be allowed to select an account named "Undeposited Funds" to be associated with payments written to QuickBooks. 

"Undeposited Funds" means payments that have been received but have not yet been deposited into your bank. 

Here is why ContractorTools only allows you to write payments to the "Undeposited Funds" account in QuickBooks...

  • Whether your customer pays you by cash, check, or credit card, eventually you will deposit the payment in your bank account. 

  • If your QuickBooks is set up to download transactions from your bank, that deposit transaction will get downloaded into your QuickBooks from the bank. 

  • In the QuickBooks process where you match downloaded bank transactions with existing transactions in QuickBooks, QuickBooks will match downloaded bank deposits with payments received in the "Undeposited Funds" account. This will transfer the payment amount from the "Undeposited Funds" account into the bank account in QuickBooks.

  • Payments that are associated with the bank account in QuickBooks are considered to be already "deposited" (in the bank) so it would not make sense to match them to transactions being downloaded from the bank. If ContractorTools wrote payments into the bank account in QuickBooks, they would not appear in the list of transactions to match to downloaded bank transactions, and so those payments would be duplicated in QuickBooks when they are downloaded from the bank.

Recommended Procedure For Handling Payments in ContractorTools and QuickBooks

Here is the correct procedure for handling payments that you receive in ContractorTools:

  1. If one does not already exist, create an invoice for the payment amount in ContractorTools.  

  2. Enter the payment in ContractorTools. (To print a customer receipt for the payment, select "Document" in the Payment screen.)

  3. Sync with QuickBooks. This will write the invoice and the payment to QuickBooks.

  4.  Go into QuickBooks and apply the payment to the Invoice. This will tell QuickBooks that the invoice has been paid, but because the payment is in the "Undeposited Funds" account, this means that the payment has not yet been deposited in the bank.

  5. Deposit the payment into your bank. QuickBooks will suggest that you match the downloaded deposit transaction to the payment receipt in the "Undeposited Funds" account. When you do, that will transfer the payment amount from the "Undeposited Funds" account into the bank account in QuickBooks, and all will be right with the world.

Deleting Payments in ContractorTools

You can delete payments in ContractorTools if they were entered in ContractorTools, but you cannot delete payments that were entered in QuickBooks (or if they came from the customer web portal). This is because payments in QuickBooks could have been downloaded from bank deposits, and deleting those would cause QuickBooks to no longer reconcile with the bank account.

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