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How to Enter Donor Payments in QuickBooks for Nonprofits

I am trying to make deposits but the system is saying that I have to match them against invoices.  I have not raised any invoices and do not intend to.  Is it possible to make deposits without raising invoices?  As a NGO we receive money from donors and this is agreed when the contract is signed, and they do not expect us to invoice them.  Also we are not involved in a normal business where we will be billing clients.
You don’t have to tie deposits to invoices, but I’m guessing you have a balance in one of your accounts receivable accounts or your undeposited funds account which is causing the error.  You can check by going to Lists > Chart of Accounts and checking the balance next to each account.

If you have old invoices entered or old payments sitting in undeposited funds, you need to get them cleaned up because your financials are almost certainly incorrect.  This is how QuickBooks is meant to be used for sales/donations:

Option 1:

  1. Create Invoice – increases sales and increases accounts receivable
  2. Receive Payments – increases undeposited funds and decreases accounts payable
  3. Make Deposit/select the payment from the undeposited funds popup window – increases cash, decreases undeposited funds

Option 2:

  1. Enter Sales Receipts – increases sales and increases undeposited funds
  2. Make Deposit/select the payment from the undeposited funds popup window – increases cash, decreases undeposited funds 

If you have the Nonprofit version you have a special Nonprofit menu which renames “Enter Invoices” to “Enter Pledges” and “Enter Sales Receipts” to “Enter Donations” making it easier to keep track of which one you should use.

Note: If you skip any of these steps, your financials will be incorrect.  If you haven't entered an incoive or sales receipt, you can go directly to make deposit, but iI don't recommend it. 

Also, it’s a good idea to enter unpaid pledges in QB so you can track what’s still owed (using Option 1 above).  You don’t need to send the invoice to your donor. 


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This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.

Ruth Perryman - QuickBooks Specialist Written by +Ruth Perryman

Ruth is the an Intuit Premier Reseller that offers great deals on QuickBooks POS and QuickBooks Enterprise. She has provided expert QuickBooks help to thousands of businesses all over the world since 1996.

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