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alect
Level 4
posted
‎September 23, 2019 12:24 PM
last updated ‎September 22, 2019 7:24 PM

managing customer pre-payments

I run an aged care business.  We provide services, invoice clients monthly.  But their payments come from third parties (government, insurance companies, etc) and are often not timed to co-incide with the invoice nor the amount.  So eg government subsidy is paid for each client at the beginning of the month during which services were provided and invoices, but the payment is calculated on number of days per month x daily rate (not the invoice amounts).

 

So when I receive the payment do I record a payment in the account for that client (and then match the bank transaction to that payment) OR do I create a Sales receipt (and then match the bank transaction to that receipt) OR some other way.

 

I need to keep abreast of the client's ongoing credit/debit balance in their account, as it will always be either in credit or debit due to timing and amount mismatches.  I also need to generate and end of month statement for each client which clearly shows the status at that point (even though payments may not have arrived yet).

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6 Comments 6
Joey Ann
QuickBooks Team
QuickBooks Team
‎September 23, 2019 03:39 PM

managing customer pre-payments

Hi Alect, 

This is a common inquiry especially from medical practitioners. 

I found the relevant article for you. Kindly click on this link: https://quickbooks.intuit.com/learn-support/en-us/reports-and-accounting/what-are-the-steps-to-recor...

 

I hope this addressed your query and if you have further questions, please do not hesitate to let us know. 

 

 

 

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alect
Level 4
‎September 23, 2019 04:21 PM

managing customer pre-payments

Thanks - but it doesn't really answer my question.  I don't have the problem of multi-customer payments from insurance  companies.  All payments are specific to one customer at a time.  The issue is the payments don't coincide with the service provision, nor the invoice nor the due dates.  They come in periodically and need to be allocated to a customer - and one payment can both pay-off outstanding invoices, and just be a prepayment for future invoices yet to be issued.  And I need to always know for each customer what their overall credit/debit balance is.

 

Seems like either payments or sales receipts are the way to go (unless there is something else?  i don't think A/R account generally or per customer is necessary or of vallue) but i don't understand the implications of using one or the other and the pros/cons of each.

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alect
Level 4
‎September 23, 2019 04:24 PM

managing customer pre-payments

And furthermore, lets say I receipt the payment on Oct 1 for Sep from the government for a specific customer and I credit that to their account.  Then on Oct 2 we issue invoices for services rendered to that customer during Sep.  Does the credit on their account automatically get allocated to the newly issued invoices?  Or do I need to do something more?

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JessT
Moderator
Moderator
‎September 23, 2019 06:49 PM

managing customer pre-payments

Let's track the insurance payments for your customer, alect! 

 

You can create a liability account where you track all the insurance payments. You’ll also want to create a non-inventory item and assign the liability account as its Income account.

 

When you receive an insurance payment, you can record it as a Bank Deposit. Select your business account in the Account field. Then, choose the liability account in the ACCOUNT field of the Add funds to this deposit section. This transaction will increase the balance of the liability account.

 

bank deposit.PNG

 

When you invoice your customer, add the non-inventory item. Then, enter a negative amount to reduce the invoice total. Something like in the screenshot below. This step will also reduce the balance of the liability account.

 

invoice.PNG

 

When you need to update your customer for their remaining credits, you can give them the liability account report.

 

Lastly, I would suggest checking this with an accountant. That way, we'll know if they have something to add to make sure you have an accurate accounting.

 

If you have questions throughout the process, please don't hesitate to go back to this thread.

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alect
Level 4
‎September 23, 2019 07:45 PM

managing customer pre-payments

Hi

 

That's much closer to what i want to do.  But I am not sure I can use a liability account as I am using cash accounting (incl for tax reporting).  So in that case do I just record the sales receipt deposit into the customer account?

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AlexV
QuickBooks Team
QuickBooks Team
‎September 23, 2019 09:04 PM

managing customer pre-payments

Thanks for getting back, alect.

 

In using the retainer, the payments are treated as a liability until it's time to record a payment. For cash basis, it won't reflect as received on the reports until the invoices are paid in full.

 

I'd also suggest reaching out to an accounting expert. They can further guide you with recording prepayment using cash accounting.

 

We're just a post away if you have other questions. We're here to help.

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