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Community Contributor *

Keeping a Clients deposit from deducting off an invoice

Hi there

The situation is as follows, I take a payment from a new client and keep this until our contract ends, at which point they have their money returned to them. The problem I have is that because there is a positive balance on their account, when I produce an invoice QB automatically deducts the deposit from the 'total line'

How can get around this please? - Many thanks

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Best answer 02-07-2019

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Established Community Backer ***

Re: Keeping a Clients deposit from deducting off an invoice

There are 2 problems here:

1 > your method of receiving deposits is creating 'open credits' in the customer account

2 > you have QB set to 'automatically apply customer credits'

solving either of these will fix the problem - I suggest you fix #1.

 

You should receive the customer deposit by creating a 'sales receipt' and also creating a 'deposit' item to code to. The 'deposit item' should be a 'service' type item that links to a current liability account called 'customer deposits'.  Then there will never be an 'open credit' in the AR system. To refund the deposit just issue a check and code it to the customer deposits liability account.  

10 REPLIES 10
QuickBooks Team

Re: Keeping a Clients deposit from deducting off an invoice

Hello aliam,

 

Welcome to the Community - thank you for your question!

 

Just to clarify - does the deposit automatically deduct from the total line when creating and invoice, or when receiving payment for the invoice?

 

Thank you,

 

Talia

Community Contributor *

Re: Keeping a Clients deposit from deducting off an invoice

Hi Talia - thanks for repling!

It is when creating an invoice

So the line total is correct, but then the amount payable at the bottom is the line total less the deposit.  - Thanks Again -  Ali

QuickBooks Team

Re: Keeping a Clients deposit from deducting off an invoice

Hi Aliam,

 

It might be worth deleting and leaving the Deposit section blank, for the purposes you are describing.

 

Is the deposit amount equaling the total amount showing as a positive balance in your customers account? or is it a partial? I'm trying to replicate it and alas, so far i can't get my deposit box to autopopulate at all.

 

Thanks,

 

 

Community Contributor *

Re: Keeping a Clients deposit from deducting off an invoice

Hi James, thanks for the help, please see attached example invoice, 

Established Community Backer ***

Re: Keeping a Clients deposit from deducting off an invoice

There are 2 problems here:

1 > your method of receiving deposits is creating 'open credits' in the customer account

2 > you have QB set to 'automatically apply customer credits'

solving either of these will fix the problem - I suggest you fix #1.

 

You should receive the customer deposit by creating a 'sales receipt' and also creating a 'deposit' item to code to. The 'deposit item' should be a 'service' type item that links to a current liability account called 'customer deposits'.  Then there will never be an 'open credit' in the AR system. To refund the deposit just issue a check and code it to the customer deposits liability account.  

QuickBooks Team

Re: Keeping a Clients deposit from deducting off an invoice

Thanks for that, i actually need the QB Side, so screenshot the page when you're editing the invoice for me please! ^_^

 

Thanks,

Community Contributor *

Re: Keeping a Clients deposit from deducting off an invoice

Thanks Mike - this worked great I used #1

Kudos!

Community Contributor *

Re: Keeping a Clients deposit from deducting off an invoice

Hi James

Thanks for your help, I used another persons answer!

Community Contributor *

Re: Keeping a Clients deposit from deducting off an invoice

Hi Talia

Thanks for your help, I used another persons answer!

Established Community Backer ***

Re: Keeping a Clients deposit from deducting off an invoice


@MikeinBC wrote:

There are 2 problems here:

1 > your method of receiving deposits is creating 'open credits' in the customer account

2 > you have QB set to 'automatically apply customer credits'

solving either of these will fix the problem - I suggest you fix #1.

 

You should receive the customer deposit by creating a 'sales receipt' and also creating a 'deposit' item to code to. The 'deposit item' should be a 'service' type item that links to a current liability account called 'customer deposits'.  Then there will never be an 'open credit' in the AR system. To refund the deposit just issue a check and code it to the customer deposits liability account.  


 

 

The advantage of using #1 is that you are utilizing the automatic sub-ledger capability of the software, which makes workflow much easier in a high volume business. 

 

If you do not use #1 you do not see the activity of each customer on their ledger page.  

 

A credit in AR shows as a negative asset on a balance sheet, which is not technically correct, so if you publish a balance sheet while open credits are in place, create a Journal Entry on b/sheet date, to move the total open credits amount from AR to a current liability, and reverse it the next day.