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jscustom
Level 1

Customer Credits

We have our customers pre-pay and then work off of the credit.  Currently it goes in to the bank account and I have to keep track of what is really there & what isn't there yet.  I was told there was another category the credit could go into to keep it separate as we work it off?  I'm also wondering how that will effect my bank reconcile?  Thanks for the help.

2 Comments 2
KhimG
QuickBooks Team

Customer Credits

Hi there, @jscustom.


Welcome to the Community. I’m here to provide an answer to your question about setting up a separate category for posting the credit while working it off in QuickBooks Online.


You can create and deposit the transaction on a dummy bank account to separate the pre-payment. Here’s how:
1.    Go to the List menu and select Chart of Accounts.
2.    At the bottom, select Account, then click New.
3.    Select the Account Type, then click Continue.
4.    Enter Account Name.
5.    Hit Save & Close.

 

 

 

 


After that, you are now ready to change the Deposit To account on the transaction. To do that, follow the steps below:
1.    Go to the List menu and select Chart of Accounts.
2.    Double-click on the bank name to open it.
3.    Look for the deposit and select it.
4.    Click the Edit Transaction at the top to change the posting account.
5.    On the Deposit To drop-down, select the dummy account. 
6.    Choose OK on the message prompt.
7.    Hit Save & Close and Yes on the Recording Transaction pop-up.


Once done working off the credit, you can transfer the funds back to the right bank account and start reconciling. For more information, check out this article: Reconcile bank and credit card accounts.

 

That should answer your concern for today. Please know that I'm only a post away if you have any additional questions. Take care and have a wonderful day!

qbteachmt
Level 15

Customer Credits

You handle prepayments like this:

 

Make an Other Charge Type item. Link it to a Liability account, if you are an accrual basis entity and/or allowed to hold Liability. Ask your own CPA. Otherwise, a Cash Basis entity links it to Income. Name the Item "Customer Prepayment."

 

Use it on a Sales Receipt when you get the payment. Deposit it to the bank. You don't use Bank to track funds remaining from a Customer prepayment. You use Customer Transactions to see this.

 

When you are ready to enter the Actual Sale or charges, make an Invoice.

Now you are ready to use the Prepayment Item on a Credit Memo dated the same as the invoice, and at the top of the Credit Memo is the icon to Apply this to their invoice.

 

To manage this, if that is Liability, you make a custom report, filter on the liability account and set it to total by Name. For the cash basis entity, you would simply run a report on the Prepayment Item, such as Sales by Customer Summary, Set for All Dates, filter on the Prepayment item. You can set Columns by Month, for instance, to see where the Positive is in Dec, and the Negative is in Jan, ending with 0 for that name = you applied the same amount they prepaid.

 

There is no Dummy Bank Account, @KhimG

 

Getting the funds is a Liability or income. Banking is Asset. There already is a Bank account = the one they literally deposited the funds into in real life. There is not another Asset to track here.

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