Handing unique customer deposits.

yasbas · ‎September 15, 2022

Hello all,

Not sure if this is the correct place to post this but here goes. I have a customer who regularly purchases from us. Now because of logistics and location etc what he does is deposits lump sums of cash for us to hold on to. Whenever he takes goods we generate the invoice and deduct accordingly. We also assist him with cash disbursments. See the example below;

To note we retail construction materials and he is a contractor. There are times when he will ask us to disburse cash to Person A so they can carry out his purchases etc. Currently I have him set up as a Supplier and when any cash deposit is made I input it as a bill. Then whenever a purchase or a disbursement is made I take it as a 'Receive Payment' inputting the necessary references in the 'Ref no.' section. I know this is not the ideal way to enter this info and would welcome any alternative solutions.

The arrangment works well because this cash injection can be used by us for LPO's and this money is paid back to him 'on demand' either via goods he buys from us or through cash disbursements as described above.

I'm searching for what would be the best way to handle this from an accounting perspective in QBO.

I know in a normal world i would simply assign 'credit' to his account which would then be automatically deducted but because we are also disbursing cash for him i don't think this is possible.

Looking forward to the feedback.

Thanks

Rustler · ‎September 16, 2022

The funds he leaves with you is your company liability, so I would receive the payment and deposit it to the liability account you first create. Use a service type item that is linked to the liability account on a sales receipt to record the receipt of funds.

When you sell to him, list the items being sold, then list the service item, set the qty to negative one, and set the amount. That sells your items and pays for them from the liability account.

When you pay money out for him, just enter the payment and use the liability account as the expense (reason) for the payment.

View solution in original post

Rustler · ‎September 16, 2022

The funds he leaves with you is your company liability, so I would receive the payment and deposit it to the liability account you first create. Use a service type item that is linked to the liability account on a sales receipt to record the receipt of funds.

When you sell to him, list the items being sold, then list the service item, set the qty to negative one, and set the amount. That sells your items and pays for them from the liability account.

When you pay money out for him, just enter the payment and use the liability account as the expense (reason) for the payment.

yasbas · ‎September 16, 2022

Hi Rustler, Many thanks for the speedy reply and noted. The back end of quickbooks is not one of my strong points so I'll have to do some shuffling around to act on your pointers and make sure ive entered the correct service types and accounts. But thanks and I'll look into it and trying it out.

yasbas · ‎May 04, 2023

Hi @Rustler

It's been a while but I would like to revisit this thread is you dont mind as I'm having some issue reconciling.

So I have my client trust account for 'Jim'

As you rightly pointed out before when he deposits money with me I make it a 'Sales Receipt' and select to deposit the funds to 'Jim Account Receivable'. Under the service type which I have labelled as 'Jim Deposit' is linked to go to the 'Jim Account Liabilities'.

Therefore the Liability and the Receivable account will always balance.

My issue now is with when Jim takes goods for me.

Do I enter it as a Sale Receipt or an Expense?

Say for example the Goods value for 5 piece of Timber is $500.

1. I need to list the items sold

2. I need to select where the value of the goods are being deposited to

3. I need to also deduct the value from the liability account.

How can I do this so the Receivable and Liability balances and also account for the sale of goods?

Hope the above makes sense?

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Handing unique customer deposits.