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  #1  
Old 11-16-2006, 09:30 AM
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lisa_mn lisa_mn is offline
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Customer Prepayments/Deposits

When a customer prepays, it should be recorded as a liability because now you owe the customer something and you haven't really earned that money yet.

In the chart of accounts, create an Other current liability type account called customer prepayments or deposits or whatever makes sense to you.

In the item list, create an other charge or service type item called prepayment, deposit or whatever and use the account you created above. Make sure this item is not taxable.

If you need to invoice the customer for the prepayment that they will pay later (sometimes customers require an invoice for any payment), Enter an invoice using the prepayment item.

If they are giving you the money right now, then enter the transaction as a sales receipt, using the prepayment item.

Once the actual sales occurs and you want to apply the prepayment, do the invoice (or sales receipt) like normal for the full charges, then add the prepayment item for a negative amount to be applied and the amount owed on the invoice will be correct.
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  #2  
Old 11-18-2006, 05:35 AM
Joe Williams Joe Williams is offline
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Report on Customer pre-payment balances

I am not sure on how to get the report added to the post.

To report on all customer pre-paid balances, use Custom Summary report and modify it: Dates=All and Display Rows=Customer. Click Advanced and check Non-zero for Display Rows.
Filters: Accounts=the liability account used for tracking the prepayments.
This will report all customers with a positive (unused) or negitive ( over applied) amounts.
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  #3  
Old 05-17-2009, 10:37 PM
shae marks shae marks is offline
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Customer Prepayments/Deposits

hi How can I better handle this situation?
We ask clients for a deposit when they sign a yearly service contract with us. A month or so after receiving this "deposit" (and deposited it to the bank) amount we then proceed to start invoicing them based on their current needs and apply the deposit to this first invoice.

METHOD SALES RECEIPT:
-We have used the "Sales Receipt" to record it by client, item DEPOSIT ON ACCOUNT created and used ie: $100.
-When we do their first invoice for the year, we have to do a search and see if we in fact received their deposit and then use the item DEPOSIT ON ACCOUNT and then credit the amount ie: $100.... Problem is it could be applied to a couple of invoices by mistake this way and visually speaking we see the item DEPOSIT ON ACCOUNT in the body of the invoice which the client doesn't stand out as well.

METHOD PAYMENT ON ACCOUNT:
-I am now doing "Customer Payments, not applied to any invoice", credit balance showing by customer.
My bank deposits are done!
-In a month or so I can then create the customer invoice, but in Multicurrency, I do not see the option to "apply credit".
---I now must close the invoice, go to said receipt done a month prior, and then apply the "Customers Prepayment" to said new invoice . THEN, I must return to said invoice and print it - showing the prepayment has been applied (at the footer of the invoice).
Alot of messy steps for nothing, especially when there are hundres of these at the beginning of our season!


Any thoughts anyone.

I'd just like to say that I questioned INTUIT on this and they had "nothing to suggest" and 'could not explain why I can apply a credit in Pro 2008 but not MCurrency 2008". They really aren't worth the price we pay for Tech Support! I have yet to have them give me productive suggestions on any given situation I have!!!! I'm grateful for these forums.

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Last edited by shae marks; 05-27-2009 at 12:17 PM. Reason: signature
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  #4  
Old 05-18-2009, 04:40 AM
Joe Williams Joe Williams is offline
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on the first invoice, use the item DEPOSIT ON ACCOUNT but set the amount negative for the amount of the deposit received.
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Old 05-18-2009, 08:01 AM
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Method 1

_You might want to create a memorized report to list the deposits by customer name to make it easier to find the necessary info.

_And, you can reconcile that deposit account and, then, set your report to filter by cleared status - no.

Method 2 (not sure about the Multi-currency issue)

_My first thought is that the 'default' pop-up which tells you that there are credits to apply. . .and do you want to apply them now. ..has been 'told' "no, don't ask again". If this is possibly the case, go to your preferences and turn on all one-time messages and see if it pops up. (you might want to make a backup before doing this in case it doesn't work, you can restore your backup. ..otherwise, you will have to go through all the popups until you 'tell' them all to be quiet. . .)

_And/or. . .set your preferences to automatically apply discounts and credits. Then, when you receive the first payment, the credit (from the pre-payment) will be applied.

Do try the different ideas and post back with your results or more questions.



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  #6  
Old 07-23-2009, 06:11 PM
Eye2Eye Eye2Eye is offline
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Pre Payments trap to be aware of or fall into

hi, i had issues over these transactions, just to say i'm registered on the VAT Cash Accounting Scheme.

On occasions i received large deposits which i entered into the clients account for later pay ment of invoices when the client decides final design or start date (yesi'm very trusted).

here the rub, i had innocently/naively thought the software would follow the VAT CAsh Accounting rules regarding receipts, and include them in the return as received in that quarter when calculating my VAT, i.e. based on receipt date.

what it in fact it did was to ignore such funds until an invoice was raised, and the advanced deposited monies allocated to invoices.

a VAT inspection highlighted the problem, the inspector was simply astonished it could happen.

a few heated discussions with tech help and i was told that Quickbooks was designed for accrual VAT scheme, the cash accounting scheme was simply 'bolted on' to it.

being fair, I contacted Sage, MYOB among others who all admitted their software would do the same.

my contention is software extensively advertised as being for the non-accountant inexperienced user, should cater for this situation, as surely i'm not the only one to fall into this trap?
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  #7  
Old 07-23-2009, 10:52 PM
RobJoy RobJoy is offline
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The solution is to record such a payment as a Sales Receipt against a prepayment item code. Then, when the job start date comes around, debit prepayment and credit income the nett amount.
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  #8  
Old 07-24-2009, 04:00 AM
Eye2Eye Eye2Eye is offline
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hi Joyce,

many thanks for the advice, thought i'd just 'flag it' for other users.

as with most things, once i was aware of (to me) an unexpected pitfall, i was able to avoid it on future receipts and transactions.

being an engineer who has trouble adding up his pocket change, i can't often detect if he amounts are 'off' to what they should be when glancing through, these likely would be glaring to others as it was to the VAT inspector lol!

i had blindly accepted as long as i input the info as received monies the software followed the basic very clear rules of VAT Cash Accounting and would include it, and i still think it should as the amounts were recorded to the sales account as a re normal receipts.

since then, instead of simply paying it into the clients account and showing it in credit , i make sure i produce an invoice when and for the amount received and allocate the payment at the time, i can always alter the invoice item detail later to reflect the item it was allocated to if needed.

as a small company any software i use is vital, i do all my own books, sales, buying and corespondent and what times left i actually occasionally do some work i've been paid for .

other than above, QBPro V2005 has performed well and earned its money, it performs all the other tasks i ask of it very well.

special mention of honour is producing progress invoices from estimates, making it very easy to keep track of payments and avoid over/under charging clients, allowing multi-level tree for clients and reporting ability. anyone armed with a bit of practice and menu searching its amazing what you can zero in on.

getting on for 5 years now, but i keep discovering things which once i know about wonder how i ever did some tasks not knowing it, recently i was looking at clients list sorting out an input error, for some reason i clicked the 'reg' button, it showed all the transactions for the client highlighted - how cool is that?


Regs
E2E
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  #9  
Old 05-20-2010, 08:53 PM
kaseyb kaseyb is offline
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Quote:
Originally Posted by lisa_mn View Post
When a customer prepays, it should be recorded as a liability because now you owe the customer something and you haven't really earned that money yet.

In the chart of accounts, create an Other current liability type account called customer prepayments or deposits or whatever makes sense to you.

In the item list, create an other charge or service type item called prepayment, deposit or whatever and use the account you created above. Make sure this item is not taxable.

If you need to invoice the customer for the prepayment that they will pay later (sometimes customers require an invoice for any payment), Enter an invoice using the prepayment item.

If they are giving you the money right now, then enter the transaction as a sales receipt, using the prepayment item.

Once the actual sales occurs and you want to apply the prepayment, do the invoice (or sales receipt) like normal for the full charges, then add the prepayment item for a negative amount to be applied and the amount owed on the invoice will be correct.

I am having such trouble with this! I do exactly what you've stated here, and I invoice my customers for a 50% deposit before we do the job. Once the job is completed I do the total for the job and deduct the 50% payment so that only the 50% that they owe is left.
The problem I have is that when I show a negative in my final invoice my GST (Goods and Service Tax) return looks like it's showing the negative as payment and including it in my return...but it has already been included when it was invoiced and received.
How can I fix this, my returns are never right! Please help!
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  #10  
Old 05-21-2010, 03:31 AM
Joe Williams Joe Williams is offline
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Try this in a sample company file.
Create an Other Charge item named Customer Deposit that goes to an Other Current Liability account "Customer's Deposit" and a Discount item named "Applied Cust. Deposit that goes to "Customer's Deposit"
To invoice for the 50%, create a invoice with just the Customer Deposit item. When you create he final invoice, enter the discount item as the last item with the amount of the deposit.
Since both items use the GST, it should show that you owe GST on the first invoice and should credit the GST in the final invoice.
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  #11  
Old 10-28-2010, 03:32 AM
Patrick79199 Patrick79199 is offline
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hello,

I got a similar problem, just a little bit more complicated.

My problem is that the customer wants all the items, the qty and the price on his prepayment invoice.

Basically like on a full invoice.

if i understand it correctly , the prepayment invoice in the described way would only show one item: prepayment, right?

but if i create a prepayment invoice with all the items on it Quickbooks would treat them as sold seperately, so iwould have sold all the items double, right?

thank you for any help

patrick
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  #12  
Old 10-28-2010, 07:31 AM
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LauraD LauraD is offline
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Here is one idea:

Create an estimate (customize the template and change the title of that to "Proposal" or something suitable).

Send him that and, then, post the pre-payment when you receive it.

Will this work for what you need?

Laura D
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  #13  
Old 10-28-2010, 09:59 PM
Patrick79199 Patrick79199 is offline
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Hi Laura,

thanks for your advise, but It doesn't get me where i need to be. The invoice should be a proper invoice with an invoice number, because it needs to go to the accountant together with the incoming payment, so I need an invoice to tie with that incoming payment as well. I am from Germany and here the tax system is very strict.

Patrick
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Old 10-29-2010, 01:24 PM
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LauraD LauraD is offline
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First of all, ask your accountant when the invoice should 'post' to your books.

If it shouldn't post when you first send it, you can create the invoice, send it to the customer, and mark it as 'pending' in QuickBooks.

Then, when you want it to post, mark as 'final' and change the date.

Laura D
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Old 10-30-2010, 05:12 PM
PennyLane PennyLane is offline
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Customer Deposits

Here's my blog article on the subject:

An easier to read version :

http://www.quickbooksnow.com/2010/04...omer-deposits/


Handling Customer Deposits in QuickBooks

Many businesses who receive deposits from customers are not aware of how to process these payments properly.

One mistake I see often is receiving a payment and leaving the payment “unapplied” to anything until some later date when an invoice is created. This process wreaks havoc with your Accounts Receivable and can have serious consequences under-stating your income if not dealt with later. (See my blog article “Important unapplied payments check”.)

Here is the best way to deal with customer deposits:

1. Create Current Liability Account on your Chart of Accounts called “Customer Deposits Received”.

2. Create an Item on your Item list – the item type “Other Charge” Called “Deposit Received” and map it to the “Customer Deposits Received” Liability Account.

3. Create the customer’s complete order at the total price they will pay for products or services as an Estimate or Sales Order, entering each line item of products and services they have agreed to purchase at the agreed prices, and enter the final item “Deposit Received” as a negative number. (*if you do not have any information on the customer’s order, you can create an invoice later, just be sure to credit them for their deposit payment!)

4. Create a Sales Receipt to the customer for the deposit amount, using the “Deposit Received” item this time as a positive number. The Sales Receipt will send the payment to the bank account, or undeposited funds as you specify at the bottom of the Sales Receipt.

5. It is extremely important to finalize this process with the last step which involves invoicing the customer for the balance upon receipt of the products and services. When you are ready to collect the balance from the customer – open the “Create Invoices” window.

6. A window will pop up letting you know the customer has an outstanding Sales Order or Estimate – you must now select the Sales Order or Estimate to create your invoice from.

7. If the terms or pricing have changed since the original creation, you may make these changes directly on the invoice. Now create the invoice and you will notice that the deposit from the sales order or estimate will appear and reduce the customer’s current balance due. The process is now complete.

*You may skip the process of creating Sales Orders or Estimates – you simply create a Sales Receipt to the Customer using the Customer Deposit item as I described and then use the same Item on the customer’s invoice as a negative when it is created, and your accounting system will be correct.

For most businesses, however, I prefer the Sales Order/Estimate method because you have a much better system for tracking out-standing customer orders and deposits. To keep track of what is going on with your customer orders and deposits, I recommend running the following reports:

1. Sales Orders: Sales – Open Sales orders by Customer,

2. Estimates – Jobs, Time & Mileage – Job Progress Invoices vs. Estimates.

2. To Create a Custom Report for the “Customer Deposits” Account : Reports : Custom Transaction Detail – On the Display tab, be sure you have date range that would encompass your longest customer deposit period, and in the “Total By” menu, choose “Customer”, then click on the “Filters” Tab and filter by Account: choose the “Customer Deposits Received” Liability Account.

I definitely recommend memorizing this report for future use, just be sure when you pull it up in the future the dates are current! This process combined with these two reports not only keeps you abreast of pending Sales and Customer Deposits you have received, it keeps your accounting process correct along the way.

It’s great for order processing because when you create the Sales Order or Estimate with the negative deposit amount, it will be very clear when you invoice the customer in the future that they have made a payment toward these services and the invoice will be created for the correct total.

On the accounting end, because Sales Orders and Estimates are non-posting, you have not at that time actually posted this negative amount to the Customer Deposits Liability account. The Sales Receipt will post the customer’s payment to your bank account as well as post the Liability appropriately to the Customer Deposits Liability Account – as it should be. After all you do owe either goods and services or a refund to this customer. When the invoice is created, the negative Customer Deposit item will post and cancel out the original liability, now that your obligation has been met.

The Custom Transaction Detail on the Customer Deposits Liability Account will show the history of that account by customer so that you can see what customer’s deposits are still out-standing and those to whom you owe goods or services.

Don’t let the long explanation deter you. The process is actually very simple to follow, and helpful for those who receive deposits from Customers on a regular Basis.
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Last edited by PennyLane; 10-30-2010 at 05:17 PM.
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