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FBW Faith
Level 1

Customer Deposits and Downpayments

I need some clarification with the recording of customer deposits/insurance payments. We have a Commercial Body Shop, we often have jobs that are in excess of $40,000. In most of those cases we have the insurance companies involved from the beginning, they send us an initial payment for the repairs needed and that will initiate the start of the job on our end. As it stands we are recording the down payment in an invoice under the appropriate job then applying the payment to that invoice. When the job is completed, which in some cases can be 2-3 months after the initial payment we are creating the final invoice then adding line items at the bottom that pull those payments in and we enter a negative dollar amount.

My question is what month is the actual sale recorded in? If the job was $40,000 and we collected $35,000 up front is the sale only being recorded for $5,000?

 

1 Comment 1
ShiellaGraceA
QuickBooks Team

Customer Deposits and Downpayments

Hello there, @FBW Faith.

 

In QuickBooks, your prepayment will be posted to your prepayment account (or Other Current Liability). It doesn't post as income, but rather as money owed to your customer.

 

When the deposit applied is for the full amount of the invoice, it moves from the liability account to your income account. Your invoice will then marked as paid.

 

About your question, it depends on the invoice date and when you'll have to consider it as sales. It's best so consult your accountant for guidance. You might want to check this link here to find an accountant: https://quickbooks.intuit.com/find-an-accountant/.

 

I'm attaching these handy articles about customer transaction workflows and manage upfront deposits that you might find helpful. These articles contain details steps and related articles.

 

Stay in touch if you have other questions or concerns. We're always here for you. Thanks for coming in and have a wonderful day.

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