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sandy38
Level 2

Customer prepaid billable expenses

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?

Thanks

14 Comments 14
Rubielyn_J
QuickBooks Team

Customer prepaid billable expenses

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:

  1. Go to the Gear ⚙ icon then choose Chart of Accounts.
  2. Select the New button.
  3. Choose Other Current Liabilities at the Account Type ▼ drop-down menu.
  4. Select Client Trust Accounts-Liabilities at the Detail Type ▼ drop-down menu.
  5. Input a name for the account, and choose an option on the dropdown list When do you want to start tracking your finances from the account in QuickBooks.
  6. Click Save and Close.

After creating an account, you'll need to make a retainer item.

  1. Go to the Settings menu, and choose Products and Services.
  2. Click the New button.
  3. From the Product/Service information panel, choose Service.
  4. Input a name for the new product or service item.
  5. Choose Trust Liability Account under the Income account ▼ drop-down.
  6. Click Save and close.

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:

  1. Select + New button then choose Invoice.
  2. Choose the Customer name from the drop-down list.
  3. Select the Retainer or Deposit item you set up in the Product/Service column.
  4. Enter the amount received for the retainer or deposit in the Rate or Amount column.
  5. Click Save and close.

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.

john-pero
Community Champion

Customer prepaid billable expenses

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.

sandy38
Level 2

Customer prepaid billable expenses

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?

Thanks

JonpriL
Moderator

Customer prepaid billable expenses

Hello there, @sandy38!

 

You can send a statement to your customer so that you can let them know about their open credits.

  1. Go to Customers.
  2. Select Create Statements.
  3. Choose a customer.
  4. The negative amount on their statement is the open credits.
  5. Click Print or Email.

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.

sandy38
Level 2

Customer prepaid billable expenses

JonpriL,

I know that I can see the credits on a statement, but is there anywhere in the program that they are visible without having to print/view a document?

 

RCV
QuickBooks Team
QuickBooks Team

Customer prepaid billable expenses

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.

 

Here's how:

 

  1. Click the Reports at the top menu bar.
  2. On the drop-down list, click Customers & Receivables and select Customer Balance Detail report.
  3. Tick Customize Report.
  4. Under Columns, search and choose for Credit and Open Balance in the search field.
  5. Hit OK.
  6. Change the date.
  7. You'll see the credit that was applied to the invoices and the customer's open balance.

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. 

sandy38
Level 2

Customer prepaid billable expenses

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.

Catherine_B
QuickBooks Team

Customer prepaid billable expenses

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.

  1. From the Customers menu, click Create Statements.
  2. In the Select Statement Options, enter the Statement Period From and To
  3. Then, in the Select Customers, click One Customer and select the specific customer. 
  4. Check the Show invoice item details on statements under the Select Additional Options section.
  5. Click Preview on how it'll look like. 
  6. From there you can Print or E-mail it. 

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!

sandy38
Level 2

Customer prepaid billable expenses

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.

 

 

RenjolynC
QuickBooks Team

Customer prepaid billable expenses

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.

 

 

 

sandy38
Level 2

Customer prepaid billable expenses

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.

 

ReyJohn_D
Moderator

Customer prepaid billable expenses

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:

 

  1. Go to the Reports menu then choose Customers and Receivables.
  2. Pick Transaction List by Customer and then select the date you want.
  3. Click the Customize Report button then tap the Filter tab.
  4. Select All Liabilities for the Account filter, then select specific customers you'll want to view the invoice and payments applied to it. 
  5. Click OK to apply the actions made.

 

Here's how to run and customize the Custom Transaction Detail report:

 

  1. Go to the Reports menu again then choose Custom Reports.
  2. Select Transaction Detail then pick a date you want.
  3. Hover to the Customize Report button at the top then pick the Filter tab.
  4. Select All Liabilities for the Account filter, then select specific customers associated with the liability account.
  5. Hit OK once done.

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.

KkellyEA
Level 1

Customer prepaid billable expenses

none of that is Quickbooks Desktop!  That is all QBO!

 

Catherine_B
QuickBooks Team

Customer prepaid billable expenses

Hello, KkellyEA.

 

I am here to listen and answer the specific issues you have within the system. With that, I'd like to ask for any additional information about your concern about QuickBooks Desktop that were not given by my colleagues above. It'll be a great help for me to walk you through the correct steps.

 

Create a new thread or reply here and I'll be here to help you out. Take care!

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