Customer buys prepaid service hours

Hello there, @roseb1.

If you accept upfront deposits or retainers for products or services, there are several steps you need to take to account for that money.

Before you can accept upfront deposits or retainers, you'll have to set up a current liability account for them. This is because retainers are liabilities, not income, even though you deposit the money into your bank account.

To create a liability account:

1. Go to the Lists menu, and then select Chart of Accounts.
2. In the Chart of Accounts window, right-click and select New from the pop-up menu.
3. Select Other Current Liability as to the account Type.
4. Enter a name for the account in the Name field.
5. Select Ok.

Once done, you'll have to create an item to use when recording upfront deposits or retainers. Here's how:

1. From the Lists menu, select Item List.
2. In the Item List window, right-click and select New from the pop-up menu.
3. From the Type drop-down arrow, select the purpose of the deposits you collect. You can click Service if you collect upfront deposits for services, or Other Charge if you collect upfront deposits for products.
4. Enter a name for the item in the Item Name/Number field.
5. Select the Upfront Deposit liability account you created from the Account drop-down list.
6. Click OK.

You can now use this item to record upfront deposits or retainers you accept. Follow this article under Step 3: Record upfront deposits or retainers you receive.

Also, I encourage checking our Help articles page to learn some tips and tricks in managing your QBDT account. From there, you can read great articles that can guide you through the steps by steps process.

Don't hesitate to drop a comment below if you have other concerns. I'm always happy to help. Take care!

@roseb1 

Consider having a time tracker app to let you set a budget or hours maximum (e.g to match with the prepaid hours) and get alerts when you’re reaching limits. You may integrate the app with your QB Desktop file.

Thank you for the response. 

All of the setup you listed has been done previously.  

Our issue with it is that the credits will not apply to new invoices apparently because we use jobs in our invoicing. The credit on the master account/prepaid invoice will not apply to a new invoice under a new job number.

i.e. If we have a customer that has a credit under a job Prepaid Service Hours.  Then we add a new job for a new prepaid service call # S4606 - the credit on Prepaid service Hours will not apply to S4606.

This is what we need a remedy to.

Thank you for the suggestion.  But it does not solve our accounting issue.

The Community has got you covered, @roseb1.

Let's ensure that the Automatically apply payments option is checked. To confirm, refer to these easy steps below:

1. Go to the Edit menu and choose Payments.
2. Select the Company Preferences tab.
3. Check the box beside Automatically apply payments.
4. Hit Save.  

Once finished, attempt to receive a payment for the new invoice again. For more info about the process, please see this article: Give your customer a credit in QuickBooks Desktop.

I also encourage you to visit our QBDT Help page. From there, you can browse articles or get some ideas from other QuickBooks users and experts. This way, you'll get more insights that can help you with your accounting tasks

If you have further questions about this post a comment below. I'm always here to help you. Have a good one. 

Yes the automatically apply option is set up.

But it will not apply across different jobs.

Yes the automatic apply payments is set up.

However, it will not apply between different jobs.

Thanks for keeping us updated, roseb1.

A data integrity issue could be the reason why it won't apply between different jobs. In this case, let's run the  Verify Rebuild Data tool that helps identify and repairs data issues within your company file. Here's what you'll need to do:

1. Click the File menu at the top.
2. Go to Utilities, then choose Verify Data.
3. If QuickBooks detected no problems, there's no further action needed. If you receive a message, "Your data has lost integrity", the file is damaged. Just continue to Rebuild Data to correct the problem.
4. When you Rebuild Data, you'll receive a message to back up your company file, just click OK. The utility starts as soon as the back up is finished.
5. Click OK when you get the message "Rebuild has completed".
6. Run Verify Data again to check for remaining data damage.

For more details about the Verify/Rebuild process, check this article: Verify and Rebuild Data in QuickBooks Desktop.

Once done, check to see if everything is working now. 

You'll also want to visit this link for more troubleshooting steps: Fix data damage on your QuickBooks Desktop company file.

Please let me know how things go on your end. I want to ensure this gets resolve for you. Take care.