Correct way to enter a retainer and third party vendor fee

MKT22191 · ‎August 02, 2020

Hello. Hope somebody would help me!

When a customer pays before a product delivery (thus, we have created a retainer account in QBO), but the amount that we receive (aka deposited to the bank account) is less than what the customer pays due to a third party vendor fee, how do I make entries in QBO?

Do I create a retainer for the amount of the deposit, and apply it to the invoice as a negative balance? If so, how do I reflect the third party vendor fee?

Or, would I create a retainer of the amount the customer paid? If so, is there a way to incorporate the fee in the invoice, so that I can apply the negative balance of the retainer to the invoice?

I would like to know the appropriate (and hopefully less entry) way.

Thank you very much!

Rustler · ‎August 03, 2020

Assuming the retainer account is a liability account, create a service item that is linked to that account. Use that item on a sales receipt or invoice to show it was paid. When you final invoice list the item(s) being sold, then list the retainer amount as the last item, qty negative one, and the amount. The buyer pays the balance.

the vendor fee is your expense. Typically you enter the vendor fee as a negative number on the make deposit screen, using the vendor fee expense account. But you could also create an item for that fee that is linked to the vendor fee expense account, set the qty to negative one, and enter the amount.

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Rustler · ‎August 03, 2020

Assuming the retainer account is a liability account, create a service item that is linked to that account. Use that item on a sales receipt or invoice to show it was paid. When you final invoice list the item(s) being sold, then list the retainer amount as the last item, qty negative one, and the amount. The buyer pays the balance.

the vendor fee is your expense. Typically you enter the vendor fee as a negative number on the make deposit screen, using the vendor fee expense account. But you could also create an item for that fee that is linked to the vendor fee expense account, set the qty to negative one, and enter the amount.

MKT22191 · ‎August 04, 2020

@Rustler Thank you very much for your answer! I appreciate it.

@Rustler wrote:
Assuming the retainer account is a liability account, create a service item that is linked to that account. Use that item on a sales receipt or invoice to show it was paid. When you final invoice list the item(s) being sold, then list the retainer amount as the last item, qty negative one, and the amount. The buyer pays the balance.

the vendor fee is your expense. Typically you enter the vendor fee as a negative number on the make deposit screen, using the vendor fee expense account. But you could also create an item for that fee that is linked to the vendor fee expense account, set the qty to negative one, and enter the amount.

For the second part of your answer, would you tell me how to create "an item for the fee that is linked to the vendor fee expense account"? Is it similar to how to create a service item for retainer?

Rustler · ‎August 05, 2020

@MKT22191 wrote:

@Rustler Thank you very much for your answer! I appreciate it.

For the second part of your answer, would you tell me how to create "an item for the fee that is linked to the vendor fee expense account"? Is it similar to how to create a service item for retainer?

You can use a service or non inventory item, I prefer to use non inventory when it is an expense. Create the item, name it and then select the expense account for the fees in the account block on the new item screen

MKT22191 · ‎August 13, 2020

Dear @Rustler

Thank you for your reply! I appreciate it.

If you do not mind, I have another question....

@Rustler wrote:

>Assuming the retainer account is a liability account, create a service item that is linked to that account. >Use that item on a sales receipt or invoice to show it was paid. When you final invoice list the item(s) >being sold, then list the retainer amount as the last item, qty negative one, and the amount. The buyer >pays the balance.

Related above, when a payment from a customer shows up in the bank account connected to QBO, do I "add" it by categorizing it under the liability account connected to the retainer account, then change it to another sales receipt when the customer actually receive the product? Or, do I "add" it by categorizing it under sales receipt as soon as the payment hit the bank? I read a post explaining the steps to record retainer, but how to categorize customer payment was not mentioned in it.

Sorry for the confusing explanation. I appreciate any input!

Thank you again!

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Correct way to enter a retainer and third party vendor fee