What Is an Open Balance in QuickBooks Online?
An Open Balance refers to the total amount a customer owes your business.
It includes all unpaid invoices, regardless of whether they are past due or not.
Essentially, the Open Balance is a snapshot of the customer’s outstanding account balance at any given time.
For example:
- A customer has two invoices: one for $500 due next week and another for $300 that is overdue.
- The Open Balance would be $800, which includes both invoices.
Open Balances are useful for tracking overall customer receivables and understanding cash flow.
What Is an Overdue Payment in QuickBooks Online?
An Overdue Payment is a specific subset of the Open Balance.
It only includes invoices or portions of invoices that are past their due date.
Overdue Payments represent the amount a customer owes that requires immediate attention or follow-up.
For example:
- Using the same scenario above, if the $300 invoice is overdue while the $500 invoice is still within its due date, the Overdue Payment would be $300.
Overdue Payments are critical for prioritizing collections and maintaining positive cash flow.
How to View Open Balances and Overdue Payments in QBO
QuickBooks Online makes it easy to track both Open Balances and Overdue Payments with built-in tools and reports.
On a customer screen, you’ll see the Open balance and Overdue payment amounts in the Summary section.
View All Open Balances
You can use the Open Invoices report if you’d like to see the Open balance for all your customers.
You can search on the Reports screen for Open Invoices or use the search in the top menu.
Either way, you’ll see a list of all open invoices grouped by customer. The Open balance is on the far right.
View All Overdue Payments
You can use the Invoices tab in the Sales section to view a list of all your overdue payments.
To get there click Sales -> Invoices in the left side menu.
Overdue invoices/payments will appear at the top of the list with an orange warning icon.
Accounts Receivable Aging Report
Another option is to view the Accounts Receivable Aging Summary report.
This report groups customer’s overdue invoices by age (e.g., 0-30 days overdue, 31-60 days overdue) to help you prioritize collections.
How to Manage Open Balances and Overdue Payments
For Open Balances:
- Review Regularly:
Monitor customer accounts to identify trends or increasing balances that may require intervention. - Send Account Statements:
Generate and send account statements to customers to inform them of their outstanding balances.
For Overdue Payments:
- Offer Payment Plans:
For customers struggling to pay overdue amounts, consider offering a payment plan to recover funds incrementally. - Apply Late Fees:
If your terms allow, adding late fees can encourage timely payments and offset the cost of late collections.
Final Thoughts
Understanding the difference between Open Balance and Overdue Payment in QuickBooks Online is key to managing your receivables effectively.
By monitoring these metrics and leveraging QuickBooks’ tools, you can maintain accurate records, improve cash flow, and build stronger customer relationships.
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