How Does FlexBooks Handle Customer Account Balances?

What are Account Balances?

MindBody allows customers to run a balance – either positive or negative.  That means customers can purchase things now and pay for them later or put funds into their accounts now to purchase things later.

• MindBody uses the term "Account Balance" to describe a client’s house account balance. If the client owes you money, MBO refers to this balance as "negative".  If the client has prepaid their Account Balance, MBO refers to this balance as "positive".

• QuickBooks uses the term "Customer Balance" to describe either the amount a customer owes you (positive balance) or the amount the customer is owed (negative balance) 

  
  

How does MBO handle Account Balances?

MindBody handles account balances in two separate ways, depending on the chronological order of when a client "redeems" or "pays".  To make it easier, we think of these two scenarios as:

A. Redeem First, Pay Later

• Day 1: Client redeems product/service, doesn't use cash, increases account balance
  • MBO calls this Day 1 transaction a "Purchase on Account"
• Day 2: Client pays for yesterday's product/service, uses cash, decreases account balance
  • MBO calls this Day 2 transaction a "Payment on Account" or "Receive a Payment"

B. Pay First, Redeem Later

• Day 1: Client increases account balance, uses cash, doesn't redeem any product/service
  • MBO calls this Day 1 transaction "Purchasing Account Credit"
• Day 2: Client redeems product/service, doesn't use cash, decreases account balance
  • MBO calls this Day 2 transaction "Using Account Credit"

What are Purchases on Account and Receiving Payments in MBO?

In the context of MindBody, specifically in the Redeem First, Pay Later scenario, we use the following terms:

• "Purchase on Account" to describe a transaction entered in MBO when a client plans to pay you in the future, similar to running a tab. Purchases on account are made using the Account payment method.  The MindBody Account Details screen will show this transaction as an "Account Debit". 
  • Example: A client forgot their wallet in their car, and asks you to charge $2 for water to their house account so they can pay the next time they visit.
• "Receive Payment" to describe a transaction entered in MBO to pay off a negative balance. This transaction may or may not be allocated to specific purchases they've made on account in the past.
  • Example: A client charged $2 for water to their house account the last time they visited and they handed you $2 today to pay for it.

What are Purchasing Account Credits and Using Account Credits in MBO?

In the context of MindBody, specifically in the Pay First, Redeem Later scenario, we use the following terms:

• "Purchasing Account Credit" to describe any transaction entered in MBO to increase their account balance for future purchases.
  • Example: A client purchases a $2 water every time they attend a class at your studio. To save time at the register and the hassle of bringing cash every time, they hand you a $20 bill and ask that you put it on their account to use toward water in the future.
• "Using Account Credit" to describe any transaction entered in MBO to decrease an account balance, that was previously pre-paid.
  • Example: A client purchases the $2 water today without handing you any cash because they put $20 on their account yesterday.

What are Invoices and Payments in QBO?

In the English language, the words "Invoice" and "Payment" can have a lot of different meanings.  In the context of QuickBooks, we use the following terms:

• "Invoice" to describe a transaction entered when a client plans to pay you in the future.  (Entering an Invoice will create an open balance for that customer until a "Payment" is recorded.)
• "Payment" to describe the transaction entered when a client pays off a previous purchase.  (Entering a Payment will mark an open Invoice as Paid and reduce an open balance for that customer.)

How does FlexBooks handle Account Balances in QBO?

To handle increasing or decreasing account balances, in QBO FlexBooks will create Invoices and Payments and then automatically apply those Payments to the Invoices (depending on the situation).

A. Redeem First, Pay Later

1. In MBO, in the Redeem First, Pay Later scenario, whenever a client makes a Purchase on Account, FlexBooks will create an Invoice in QBO.  This Invoice will:

• record the income from the purchase on the Profit and Loss Report
• increase Accounts Receivable account on the Balance Sheet
• decrease the customer balance in QBO (in QBO, a negative balance means the client owes you money)

2. In MBO, in the Redeem First, Pay Later scenario, whenever you Receive a Paymentfor a specific purchase, FlexBooks will create a Payment in QBO.  This Payment will:

• decrease Accounts Receivable account on the Balance Sheet
• increase the customer balance
• not record any income or make any changes to the Profit and Loss Report
• be applied to the appropriate Invoice (and mark the invoice as "Paid")

Please see a this video for a demonstration of how QBO (and FlexBooks) use Invoices and Payments to handle customer balances in the Redeem First, Pay Later scenario.

B. Pay First, Redeem Later

1. In MBO, in the Pay First, Redeem Later scenario, whenever a client Purchases Account Credit, FlexBooks will create a Payment in QBO, but won't link it to an Invoice, because there is no Invoice to apply it to.  This Payment will:

• decrease Accounts Receivable account on the Balance Sheet and may bring the total balance negative (a negative A/R means you owe your clients for unearned revenue)
• decrease customer balance and may bring the total balance negative – (in QBO, a negative customer balance means the client has money in their account for a future purchase)
• not record any income or make any changes to the Profit and Loss Report
• not be applied to any invoices (and will show as "Unapplied" as a status)

2. In MBO, in the Pay First, Redeem Later scenario, whenever a client Uses Account Credit, FlexBooks will create an Invoice in QBO.  This Invoice will:

• record the income from the purchase on the Profit and Loss Report
• increase Accounts Receivable on the Balance Sheet
• increase the customer balance
• automatically applies the Invoice to the open customer balance and marks the invoice as "Paid"

How can I see my Customer Balances in MBO?

Run an Account Balances report in MBO to see all of your open balances.  See this MBO support article for instructions.

How can I see my Customer Balances in QBO?

In QBO, from your Reports > Reports tab, see the "Who owes you" section for a variety of reports.  The "Customer Balance Summary" report will be closest to the MBO Account Balances report.

Note: MBO and QBO report customer balances in opposite manners!

• If a customer has money in their account for a future purchase: MBO will display this, in black, as a positive number – QBO will display this as a negative number.
• If a customer owes you money from a past purchase: MBO will display this, in red, and in parentheses – QBO will display this as a positive number.