Applying Customer deposits to invoice

Thanks for getting in touch with the Community, Salessio0564.

If you require a deposit from your customer, you can add a deposit field to their invoices. After you've entered a deposits on an invoice, it will reduce the total amount and calculate your customer's balance due. You'll want to be sure to enter everything correctly so you can see it in the Deposit Detail report.

Initially, you'll need to turn on deposits if you haven't yet.

Here's how:
 

1. Use your Gear icon, then go to Account and settings.
2. Access the Sales tab.
3. In your Sales form content section, click the Pencil (Edit) icon.
4. Turn on Deposit.
5. Select Save, then Done.

After turning deposits on, you can add a deposit to an invoice:
 

1. Find an invoice you want to add a deposit to and begin editing it.
2. Enter the amount in your Deposit field.
3. From the Deposit to ▼ drop-down list, choose Payments to deposit or Undeposited funds. If you pick a bank account, it won't show up on your Deposit Detail report. This report only shows deposit transactions and payments deposited directly to the bank.
4. Select Save and close.

Next, you can record your deposit and run the Deposit Detail report.

If there's any additional questions, I'm just a post away. Have a great Monday!

@Salessio0564 

The response provided by @ZackE is incorrect.  That method will not show the deposit as income on cash basis.

There are several ways this can be handled, depending on whether you issue an invoice for the deposit or not.

You can receive payment from the customer (New > Receive payment) and not apply it to an invoice.  When you run a P&L on cash basis, the deposit will show as 'Unapplied Cash Payment Income' as of the date the deposit is received.

If you issue an invoice for the deposit, create a 'Customer Deposit' service product assigned to an income account and receive payment on that invoice.  Then, when you issue the final invoice, add the Customer Deposit service product as a line item as a negative amount, thereby reducing the amount due.  That will book the deposit as income as of the date payment is received on the invoice for the deposit and the remaining income on the final invoice.

Hello, 

thanks for your help, but I’m looking to not include the deposit into income until the full payment is made. 

If the deposit isn't considered income, record it as an Account Receivable prepayment from the customer, Salessio0564.

Here's how to record it:

1. Select +New.
2. Choose Bank Deposit.
3. Find the bank account that the money is received into, and the Payment Date.
4. Scroll down to the Add funds to this deposit section.
5. Enter the Customer name field.
6. In the Account, type as Debtors or Account Receivable.
7. And the amount paid by the customer.
8. Then, hit Save and close.

Once the full payment is received, you can link to your invoice and apply the payment by following these steps:

1. Select + New.
2. Choose Invoice.
3. Fill out the necessary information, including the VAT information.
4. Click Save and close.

To apply prepayments to the invoice, follow these instructions:

1. Locate and open the Invoice.
2. In the top right-hand corner, click Receive payment.
3. In the Outstanding Transactions section, tick/select the Invoices you want to associate with the prepayments.
4. In the Credit section, tick/select the relevant Payments created in Step 1, above.
5. If there is a balance due on the Bill, you can pay the remainder by editing the Payment amount against the Invoice. If you don't want to pay the remaining amount, edit the Amount figure above the right-hand side of the Outstanding Transactions section.
6. Click Save and close.

If you need any further clarification or guidance, feel free to reach out. We are fully committed to providing you with the assistance you need.

@Salessio0564 

"but I’m looking to not include the deposit into income until the full payment is made."

Then you're not on cash basis.  If you're on cash basis, customer deposits are income when received.  The IRS would not approve of deposits not being reported as income.   Accrual basis doesn't recognize the deposit as income until the work/product has been delivered.