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tuscancourtyard
Level 1

How can I create special payment terms ? i.e.: Immediate downpayment, additional payments at 30,90,180 days before service?

 
5 Comments 5
qbteachmt
Level 15

How can I create special payment terms ? i.e.: Immediate downpayment, additional payments at 30,90,180 days before service?

You need 4 invoices:

Immediate downpayment <== First charge

additional payments at 30 <== Next month's invoice

90

<== Next invoice

180 days before service <== Final invoice

 

Terms is how you set the due date for Each Invoice. Example:

 

Your Wedding is Jan 1, 2020.

 

I charge you in Jan 1, Feb 1, April 1, July 1, 2019. Every invoice has Terms net 15 = once I issue each invoice, you are Late if you don't pay that invoice in 15 days.

Malcolm Ziman
Level 10

How can I create special payment terms ? i.e.: Immediate downpayment, additional payments at 30,90,180 days before service?

@qbteachmt

"You need 4 invoices:"

 

 

Given this is before service, none of these payments are income, assuming you keep the books on the accrual basis, which is the proper way to keep the books if you want to measure business performance.

 

I would send an Estimate laying out the payment schedule, and when you receive payment, record that with a Receive Payment type transaction. This puts a credit on the customer's account which will be used when the Invoice is created upon service delivery. 

 

A credit in AR shows as a negative asset on a balance sheet, which is not technically correct, so if you publish a balance sheet while open credits are in place, create a Journal Entry on b/sheet date, to move the total open credits amount from AR to a current liability, and reverse it the next day.

 

There is another option to record the payment with a Sales Receipt using a service item where the income account is linked to a current liability account, and use that item as a negative in another Sales Receipt, upon service delivery.

The problem with this method is that a) you don't see a balance on the customer's ledger page,  and b) it bypasses cash vs accrual reporting in QBO

qbteachmt
Level 15

How can I create special payment terms ? i.e.: Immediate downpayment, additional payments at 30,90,180 days before service?

Right here, this is why you use Invoices: "assuming you keep the books on the accrual basis, which is the proper way to keep the books if you want to measure business performance."

 

The invoice is how you see you are Anticipating these payments on that cycle.

 

"record that with a Receive Payment type transaction. This puts a credit on the customer's account which will be used when the Invoice is created upon service delivery"

 

And that's Backwards, or negative AR. That's the Worst thing to do for any business.

Malcolm Ziman
Level 10

How can I create special payment terms ? i.e.: Immediate downpayment, additional payments at 30,90,180 days before service?


@qbteachmt wrote:

Right here, this is why you use Invoices: "assuming you keep the books on the accrual basis, which is the proper way to keep the books if you want to measure business performance."

 

The invoice is how you see you are Anticipating these payments on that cycle.

 

"record that with a Receive Payment type transaction. This puts a credit on the customer's account which will be used when the Invoice is created upon service delivery"

 

And that's Backwards, or negative AR. That's the Worst thing to do for any business.


 

 

"That's the Worst thing to do for any business"  LOL, that a bit harsh

 

You obviously have not tested this

 

If you don't  record the received payment with a Receive Payment type transaction, then you are bypassing cash vs accrual reporting.  

tuscancourtyard
Level 1

How can I create special payment terms ? i.e.: Immediate downpayment, additional payments at 30,90,180 days before service?

thank you! This is exactly what I ended up doing. I was really hoping to have some way to automatically generate invoices because this is a lot of steps. Also creating invoices does not automatically calculate the next invoice amount intelligently and take into account previous invoices...

 

If there are more advanced invoice generation features then i'm all ears 

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