TIP: Enter credit card charges individually for better accuracy and easier reconciliation
Many QuickBooks® users still enter credit card transactions by categorizing them on the credit card statement and then listing the totals for each category as an account line item on a check that they pay to the credit card company.
The correct way to enter credit card charges is by entering each transaction as an individual credit card charge using Enter Credit Card Charges in the Banking menu. The benefits of using this method include:
- The charge date is entered as of the date the transaction took place, not when payment is made, which could be over 30 days later. This creates more accurate reports.
- The actual vendor is the name entered in QuickBooks®, not the credit card company name. This makes it easier to track older transactions, for example to check on whether an item is under warranty.
- Credit card statements can be reconciled in QuickBooks® so each transaction can be verified. This leads to more accuracy and prevents extraneous charges from slipping through.
- If a partial payment is made to the credit card company, the balance owing is tracked in a liability account so the user always knows how much they owe. When a partial payment to the credit card company is entered on a check with the accounts as line items, it is very difficult to calculate how much of the payment to allocate to each account, and then track those allocations when the next credit card statement arrives.
Time can be saved when entering credit card charges individually by using generic names like Restaurant, Parking, Gas, Hotel when it is not necessary to have a specific vendor's name on the transaction. The process can also be made easier when the QuickBooks® Auto Recall feature is turned on under My General Preferences, because then only the first few letter of the name need to be entered and QuickBooks® will fill out the rest of the transaction. The only thing that needs to be changed is the amount and date.
The result is more accurate recordkeeping which makes it much easier to fix things when something goes wrong because all the detail is there.
