I lease a commercial building and I have been invoicing the lessee on a quarterly basis using the billable expenses function in QB. I have income and expense accounts so that I can track the individual items. These include gas, water, electric, taxes, etc. We have now changed so that they pay a fixed fee monthly which gets applied against the billable expenses, so they can either have overpayed or underpayed at different times of the year. How should I invoice the prepayment and then how do I apply it when I bill them?
Hi there, @sandy38.
I'd be glad to help you record a prepayment in QuickBooks Desktop. We need to enter the prepayment as a retainer or deposit. This way, it is treated as a liability. When you invoice the customer and receive payment against it, you'll turn that liability into income.
To start, create a bill for an expense. Once done, set up a liability account to track the amount of the retainers received from your customer. Here's how:
After creating an account, you'll need to make a retainer item.
The retainer item can now be selected when creating an invoice or sales receipt for a deposit or retainer payment.
You can now invoice customers for deposits or retainers. Here's how:
I've also added this article that can guide you on how to set up, record, and manage upfront deposits in QuickBooks Desktop.
Please don't hesitate to comment below if you have anything else in mind. I'd be glad to assist you. Keep safe and healthy.
A quicker way is to record the psyments directly against Accounts Receivable. You can do this in a Deposit or in a Sales Receipt. Customer name is required when recording to AR so it will show as available when you ndxt create an invoice with billable expenses. You will be prompted if you wish to apply outstanding credits to the invoice, if you do that is one less item to worry about.
The lessee open balance viewed fro. Customer page will always be correct whether positive or negative.
That looks like it works. I'm not sure what I was doing differently, but I could not make it work. Where can I view the credits available to a customer? I know that it shows up on the balance sheet (accrual) and also as the balance on Prepaid Expense account, but is it viewable somewhere for the customer?
Hello there, @sandy38!
You can send a statement to your customer so that you can let them know about their open credits.
In addition, here's an article you can read to learn more: Create a billing statement.
Lastly, I've got you this helpful article for ideas to help manage all your customer's related tasks: Get started with customer transaction workflows in QuickBooks Desktop.
Keep me posted in the comments if you have any other questions. I'll be here to lend a hand.
Thanks for coming back, sandy38.
At this time, running reports and creating a statement is the option we have to access the customer's open credits. Then, you can print or view the document to see the details of the credits.
Aside from statements, you can run Account Receivable (A/R) Aging Summary or Detail to see the credits. You can also pull up and customize the Customer Balance Detail report.
If you need to transfer credits from one customer job to another, juts refer to this article for the steps and details: Transfer customer credit from one job to another.
I've got a link here that provides you with articles about managing your reports: https://quickbooks.intuit.com/learn-support/en-us/reports/07?product=QuickBooks%20Desktop.
Fill me in if you need a hand with reconciling your account or any QuickBooks related. I'll be here to ensure your success. Take care always.
I must be misunderstanding something. The only place I can see the customer's deposit is in the liability account that I created. The statement does not show any credits and it does not show the invoice where I used the negative amount for the item to pay the invoice.
Hello there, sandy38.
We can review the Statement Period to see if the transactions falls within the date range. We'll use a single customer to do that.
Here's an article that you can check out on how to create and customize statements: Use and customize form templates.
Just let me know if you need anything else. Take care and have a nice day!
OK. That allows me to see the details of the invoice, but the credit does not show on the statement. I have prepaid expenses of $1600 and billed expenses of $1005. The $595 in remaining does not show on the statement. I can see it on the Balance Sheet or the Prepaid Expense account report.
This is what I am doing:
Create invoice for rent and prepaid expense line items.
Receive payment for invoice.
Create invoice for reimbursable expenses with the prepaid expense line item as a negative.
Profit & Loss and Balance Sheets are correct. The remaining prepaid expenses are on the balance sheet as a short term liability.
The problem is that I don't have an easy way to show my lessee the remaining balance on the prepaid expense account.
Thanks for getting back to us, sandy38.
You'll want to undo the deposit you have recorded. Then, create a credit memo by following the steps in this article: Give your customer a credit or refund in QuickBooks Desktop for Windows.
Once done, go to Banking > Make Deposit and make sure to link the credit memo. Run the statement and you will see the credit.
Please let me know how it goes. I'm just a few clicks away to help you some more. Take care and stay safe.
Here is what I have done and from what I can see, it works.
First of Month: Create Invoice with two line items; Rent & Prepaid Expense.
Middle of Month: Receive Payment so invoice is paid, Create Credit Memo for Prepaid Expense.
End of Month: Create Invoice by Adding Costs & Applying Credits so invoice is paid.
Statement shows remaining credits. Balance Sheet and P&L are correct. Balance in Prepaid Expenses liability account is zero.
Please let me know if there is something wrong with the way I am doing this. Thanks.
Thanks for getting back here in the Community, @sandy38.
I'm here to add some info about recording pre-payment and running reports to see applied credits and remaining balances in QuickBooks Desktop (QBDT).
First off, you're on the right track in using the Receive Payment feature when recording invoice payments from your customers. Then, create a credit memo for the prepaid expense amount and using the liability account where to deposit the money. After, apply the credit memo to the invoice.
Also, I'd suggest putting a description on the customer prepayment transaction. This way, you'll be able to track where the amount is applied to.
Then, you can run and customize the Transaction List by Customer report to check the customer invoice and the payments applied. And use the Custom Transaction Detail report to locate the customer associated with the liability.
To run the Transaction List by Customer report, here's how:
Here's how to run and customize the Custom Transaction Detail report:
I'll be providing you this article to gain more insights on how to customize your reports in QBDT. This way, you're able to pull up the details and formats you want from your reports. Please refer to this article for the steps how: How to customize reports in QBDT?.
You can always post a question here in the Community forum if you still need further assistance and clarifications with tracking prepayments and running reports. I'll be here to assist you. Take care and have a good one.