Showing results for 
Search instead for 
Did you mean: 
Level 3

Custom Item paid in split payments

We use Quickbooks Desktop Enterprise Edition with Manufacturing


We are having a large custom item made by a vendor that we will mark up and resale to a customer. We have created a new inventory item for this. The vendor requires an upfront deposit payment of 1/3 of the cost. We charge the customer an upfront deposit of 1/2 of the sales price. We treat the item as an inventory item type.
The question is with entering the vendor bill and the cost. If the item costs 12,000 and one third is due upfront, the vendor bill would be 1/3 of the quantity of the cost 12,000 for an amount of 3,000, right? When we collect the customer deposit for 1/2 of the item sales price, would we have a negative inventory item of 1/2? Or do we create a pre-payment from the custome with no inventory attached to it? We wouldn't create the item receipt for 1 quantity until the large custom item arrives at our site.

1 Comment 1

Custom Item paid in split payments

We'll ensure you can seamlessly track your vendor bill and customer deposit in QuickBooks Desktop (QBDT), Toonces. We'll guide you through the process below.


If the item costs 12,000 and one-third (1/3) is due upfront, your vendor bill should show the amount of 4,000. Then, when collecting a customer deposit for half of the item's sales price, create a pre-payment or retainer transaction to avoid negative inventory and ensure proper payment linkage upon item recording.


To set up an upfront customer deposit, start by adding a liability account for them. This is because upfront deposits and retainers are liabilities, not income, even though you deposit the money into your bank account. Here's how:


  1. From Transactions, 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 the account Type.
  4. Enter a name for the account (for example, Upfront Deposit) in the Name field. Note: You should set up the account with a zero opening balance unless you are tracking existing upfront deposits or retainers.
  5. Select Ok.


After that, you need to create an item to use when recording upfront deposits or retainers. For the step-by-step guide in completing this procedure, please see this article: Manage upfront deposits or retainers.


Also, we've included these resources to help you monitor your sales, expenses, and accounts payable using reports: 



Should you have other concerns or questions about managing vendor and customer transactions, don't hesitate to visit the Community again. We'll get back to help you the best that we can. Have a good one, Toonces.

Need to get in touch?

Contact us