cancel
Showing results for 
Search instead for 
Did you mean: 
Level 1

Sending an invoice to a customer for a deposit.

Hi - I have a wedding business where customers pay me a 25% deposit, then the remainder one week before the wedding. Right now I send the customers an estimate, then they notify me that they want to book. How do I send the customers an invoice for a deposit? Do I create 2 separate invoices? One for the deposit and then one for the final payment less the deposit? Should I add a product/service item for deposits? How will this affect my sales tax liability?

 

 

(Title has been edited by moderator for clarity)

Solved
Best answer 08-29-2017

Best Answers
ProAdvisor

Re: Invoicing for a Deposit

 

Customer deposits can be handled as follows:


1.  Receive the payment and leave it as a credit on the customer's account.  Then, invoice for it later and apply the credit to the invoice.

2.  Use the + bank deposit and apply the deposit directly to the customer deposit acct.

3.  (best method for invoices with sales tax):   Set up an item that points to the account for customer deposits (a liability account).  Use a sales receipt for the customer deposit.  Then later change your estimate into an invoice for the full sale and enter a line item for the customer deposit as a negative amount -- this will remove it from the liability account.  Be sure to set this item as non-taxable.  This way you will charge sales tax on the full amount in your final invoice.

 

View solution in original post

22 Comments
ProAdvisor

Re: Invoicing for a Deposit

 

Customer deposits can be handled as follows:


1.  Receive the payment and leave it as a credit on the customer's account.  Then, invoice for it later and apply the credit to the invoice.

2.  Use the + bank deposit and apply the deposit directly to the customer deposit acct.

3.  (best method for invoices with sales tax):   Set up an item that points to the account for customer deposits (a liability account).  Use a sales receipt for the customer deposit.  Then later change your estimate into an invoice for the full sale and enter a line item for the customer deposit as a negative amount -- this will remove it from the liability account.  Be sure to set this item as non-taxable.  This way you will charge sales tax on the full amount in your final invoice.

 

View solution in original post

Level 15

Re: Invoicing for a Deposit

"One for the deposit"

Yes.

 

"and then one for the final payment less the deposit?"

 

The final invoice is the amount in Full. The deposit service is listed here as negative to reduce the total from the wedding, or put that on a Customer refund/credit memo to apply it to the invoice, for the date of the invoice, to show it is partially paid by the deposit. The credit memo is dated not prior to the date of the final invoice.

 

 

"Should I add a product/service item for deposits?"

 

Yes.

 

Here is the problem with having Negative AR (prepayment with no open charges). You have Unapplied Cash Payment.

 

You are either a Cash Basis reporting entity, in which case this is Income to you.

 

Or, you are an Accrual Basis entity, in which case the Service for the prepayment links to Liability.

 

In Neither case is carrying Negative AR a good method.

 

You should review this with your own Tax accountant or CPA.

Level 1

Re: Invoicing for a Deposit

I appreciate your refresher on the accounting principles behind customer deposits, but my version of this question goes more to the best (or most QB automated) method for requesting/receiving the deposit.  I  have a business that also requests deposits as a regular first step and being able to email a request document (much like the invoice document) that has embedded credit card processing links is very helpful.  I don't see a way to embed a payment link in an emailed estimate document and I don't really see a way to tweak any of the other document types to fit either.

 

Any thoughts?

 

Thanks!

Anonymous
Not applicable

Re: Invoicing for a Deposit

Thanks for joining the conversation, ctgscott,

 

I'm glad to hear that the insights from this thread have helped you. I can share some information about receiving deposits in QuickBooks Online.

 

Currently, the option to add the payment link for your customers to make online payments is only available for QBO invoices. Being able to add this option to your estimates and all other customer transactions in QBO is a great idea, and I would like to put this forward to our developers so I'd encourage you to send them your product suggestion.

 

Here's how to send your product request: 

  1. Click the Gear icon.
  2. Select Feedback.
  3. Enter your suggestion.
  4. Click Next.
  5. Click Skip and send message.
  6. Select a Category.
  7. Click Send message.

In the meantime, you can reach out to our Intuit Developers Team. They can help you look for an integrated app to add a payment link to your estimates. Here's how you can get in touch with them: https://developer.intuit.com/app/developer/homepage

 

Please feel free to let me know how this goes, ctgscott. I want to ensure you're taken care of.

Level 1

Re: Invoicing for a Deposit

I'm so glad you posted this question and am wondering if you found a solution? I'm testing out a free trial right now to see if I want to switch to quickbooks, but being able to send, and get paid for a deposit is critical. I'd love an update if you have one! thanks!

Level 10

Re: Invoicing for a Deposit


@mayflour wrote:

I being able to send, and get paid for a deposit is critical. 


To send an invoice for a prepayment, you don't want to accrue the income with the invoice so instead of using a regular Item linked to an Income account, you could use an Item linked to a Prepayments liability account.

This creates an AR asset which is not technically correct. It also creates a Prepayments liability balance which really only s/be created when the payment is actually made. 

 

The other option is to send the invoice, just a request for payment and to allow the customer to pay online using QBO payments,  then delete it once the customer has paid.  This leaves a credit on the customer's account, to be used later when you deliver and issue the real invoice.  This is the best way if you want to track Prepayments in the AR sub-ledger, and see balances in the customer profile, and to run P&L reports in either cash or accrual basis

Level 1

Re: Invoicing for a Deposit

I'm not worried about the payment link but I am trying to send an invoice for deposit that shows the deposit amount requested along with the remaining balance that will be due on the same invoice.  Ie progress payment request with balance due now. Any suggestions. 

Moderator

Re: Invoicing for a Deposit

Hello kbogoje.

 

Thanks for posting here in the Community. I'm here to assist you with your invoice concern in QuickBooks Online.

 

Once a customer makes a partial payment, the Balance Due will show the remaining balance when you email the invoice. You can receive the partial payment on an open invoice and email it to your customer.

 

Here's how:

 

  1. Open the invoice.
  2. Click Receive payment in the upper-right corner.
  3. Below Amount received, enter the partial amount.
  4. Click Save and send.
  5. Enter the customer email.
  6. Enter the message.
  7. Click Send and close.

Once you email the invoice with the partial payment, it'll show the details like the partial payment and the balance.

 

 

 

 

You can also try checking if the progress invoicing feature works for you. In case you want to know more, I'm adding the article I recommend on this:

 

Turn on and use progress invoicing.

 

I'm always available anytime you need additional assistance regarding the invoice. I'll be sure to get back to you.

Level 1

Re: Invoicing for a Deposit

I just don't understand why this is so complicated in Quickbooks. When I use Square to invoice there is a request deposit field all in one invoice. Super easy.  I work primarily with 50% upfront deposits and this just seems like a huge flaw in the system for a business like myself. 

Moderator

Re: Invoicing for a Deposit

Hello Chad Kilgore,

 

I'm here to assist you with your concern about recording upfront deposits in QuickBooks Online.

 

The Square app helps process sales data and is mainly for processing customer payments. Since QuickBooks Online (QBO) is a financial management software, the recording of transactions is crucial.

 

The system makes sure the recording of transactions are correct to ensure it flows accurately in the reports. For more insights into the process, I recommend visiting the article I recommend on this:

 

How to record a retainer or deposit.

 

Feel free to reach out to me for any further questions regarding the payment process. The Community is always around to assist.

Level 1

Re: Invoicing for a Deposit

I agree.  It is insane that QBO makes taking a deposit so difficult.

Level 1

Re: Invoicing for a Deposit

This doesn't really help. 

Level 1

Re: Invoicing for a Deposit

The question is not how to record a deposit. the question is how to request only the deposit on an invoice while still showing the full amount that needs to be paid once service/job is complete.

 

Something like

Service: $50

Deposit: 50%

Due now: $25

Due on DATE: $25

QuickBooks Team

Re: Invoicing for a Deposit

Hello there, @hellobetsyann.

 

Let me share an option to request a deposit on an invoice with the full amount that you may consider.

 

Just to clarify, do you want to show the total amount of the invoice, the remaining balance of the customer, and the paid amount? If so, you can turn on the Account summary table to show the amount details. Here's how:

 

  1. Click the Gear icon.
  2. Select Custom Form Styles.
  3. On the page, choose the default invoice, then click Edit.
  4. Go to the Content tab.
  5. Click the Table section.
  6. Under the Account summary section, check the box beside Show on invoice.
  7. Hit Done.

Once done, you can send the invoice to your customer with the number of details in the Account summary section.

 

In case you need tips and related articles in the future, visit our QuickBooks Community help website for reference: QBO Self-help.

 

Feel free to leave a comment below if you're referring something else or if you have any other questions.

Level 1

Re: Invoicing for a Deposit

I too am having trouble finding an answer to this--and your answer is still answering a different question. This seems so freaking simple--people ask a very straightforward question, and get all kinds of answers that don't address the question at all, so let's see if I can make it abundantly clear what is being asked:

 

I (and others who keeping asking, but not getting answers) want to send an invoice to a client asking for a deposit. I want that invoice to reflect the total estimate that I have sent them. I am not invoicing them for service that hasn't happened yet--I am invoicing them for the amount needed to secure the services. I want the invoice to reflect the total due after services are rendered (i.e. total estimate minus the deposit).

To be clear--the client has not paid a deposit--they need an invoice to that. This is what I (and others) are asking about. The invoice is not for services--it's for a deposit to retain services. I want the deposit invoice to reflect what will be due now (the deposit) and what will be due after the services are delivered (full estimated cost minus the deposit). Is this possible?

QuickBooks Team

Re: Invoicing for a Deposit

Hi fjhersom,

 

You can create a service item for the deposit and check with your accountant for the holding account where you want to deposit the invoice payment. Let me guide you through on how to get this done.

  1. Open an invoice, click Add new.
  2. Click Service. Enter a service name (e.g. pre-payment deposit).
  3. Under Income account, choose an account (please refer to your accountant).
  4. Click Save and close.
  5. Go to + Create icon, then Receive Payment to record the deposit.

Then, create a credit memo to offset the account of your customer deposit.

  1. Go to (+) Create.
  2. Click Credit Memo. Then, use the same service item you've created.
  3. Click Save and close.

Once you're ready to apply the deposit of the service rendered. Just use the credit memo.

 

You can follow the steps provided by my colleague @Mark_R on how to show the account summary of the invoice. It displays the balance forward, payments and credits, new charges, and the total amount due.

 

Feel free to read this article for details: Account Summary on an invoice.

 

You might also want to visit our page for future reference: Sales and customers.

 

Let us know if you need help with anything else.

Anonymous
Not applicable

Re: Invoicing for a Deposit

I have to agree with everyone, QB Online makes is almost impossible to issue a deposit for services invoice.  When I follow the instructions laid out above, it's no clear to my client what amount to pay.  If I issue a separate invoice just for the deposit, then client doesn't see the total amount and I have to do double the work.

 

This is a BIG downfall of the product.  Please fix ASAP.

 

 

Anonymous
Not applicable

Re: Invoicing for a Deposit

I'm having the same issue.  Has anyone at QB gotten back to you about how to deal with this?

 


@fjhersom wrote:

I too am having trouble finding an answer to this--and your answer is still answering a different question. This seems so freaking simple--people ask a very straightforward question, and get all kinds of answers that don't address the question at all, so let's see if I can make it abundantly clear what is being asked:

 

I (and others who keeping asking, but not getting answers) want to send an invoice to a client asking for a deposit. I want that invoice to reflect the total estimate that I have sent them. I am not invoicing them for service that hasn't happened yet--I am invoicing them for the amount needed to secure the services. I want the invoice to reflect the total due after services are rendered (i.e. total estimate minus the deposit).

To be clear--the client has not paid a deposit--they need an invoice to that. This is what I (and others) are asking about. The invoice is not for services--it's for a deposit to retain services. I want the deposit invoice to reflect what will be due now (the deposit) and what will be due after the services are delivered (full estimated cost minus the deposit). Is this possible?


 

Level 1

Re: Invoicing for a Deposit

nope....ridiculous.  considering leaving QB

QuickBooks Team

Re: Invoicing for a Deposit

Hello there, @Anonymous, @kbogoje

 

You'll need to enter a prepayment in your QuickBooks Online (QBO) account. A prepayment is similar to a deposit which is a payment made before your customer receive goods, services or before a debt is due.

 

To enter a prepayment, you'll need to create a liability account and a retainer item. This way, you can track the amount of the retainers you receive from your customers. Let me show you how.

 

In your QBO account:

  1. Go to the Gear icon.
  2. Select Chart of Accounts.
  3. Select New.
  4. Choose Other Current Liabilities from the Account Type drop-down menu.
  5. Select Trust Accounts - Liabilities from the Detail Type drop-down menu.
  6. Enter a name for the account.
  7. Click Save and close.

To create a retainer item:

  1. Go to the Gear icon.
  2. Select Product and Services.
  3. Select New.
  4. Choose Service.
  5. Enter a name for the new product and service item.
  6. From the Income account drop-down menu, select Trust Liability Account.
  7. Click Save and close.

Here's an article you can check for more information and detailed steps: Record a Retainer or Deposit.

 

I also recommend reaching out to your accountant for further advice on recording this. This way, you'll be guided accordingly.

 

In case you want to learn how to give a delayed credit to a customer, feel free to check this article for reference: Enter and Apply a Credit Memo or Delayed Credit.

 

As always, in case you want learn some tips on managing your QuickBooks Online account, you can always visit our Help articles page for reference.

 

Should you need further assistance with your QuickBooks Online account, feel free to leave a comment below. We're always here to help.

Level 1

Re: Invoicing for a Deposit

The client is not standing in front of you, hence the need to invoice for the deposit.  Im convinced the help desk here is giving standard responses and not listening.

Highlighted
QuickBooks Team

Re: Invoicing for a Deposit

Hi there, yellowconegroup,

 

Let me clarify things out about sending an invoice to a customer for a deposit.

 

As mentioned by @pawfectforyou, an estimate was sent to the customer. For this, you can create a first invoice for the 25% deposit and the second one for the final payment.

 

To do this, let's go to the customer's profile and create an invoice out of the estimate from there. Here's how:

  1. Go to Sales from the left navigation menu, then select Customers.
  2. Locate the customer's name and click it to open the profile.
  3. Find the open estimate, then click Start invoice.
  4. The estimate will appear on the right side of the invoice.
  5. Click Add.
  6. Select the second option where you can enter a percentage, then click Copy to invoice.
  7. Click See the math link to see how your sales tax is calculated.
  8. Select Save and send.

After that, you can create a bank deposit to record the initial payment. Use the accounts receivable for the source account so you can link the deposit to the invoice.

 

Let me guide you through on how to accomplish this:

  1. Click the + New icon.
  2. Select Bank deposit under Other.
  3. Choose a bank from the Account drop-down list where you want to deposit the money.
  4. Enter the customer's name in the Received from field.
  5. Select Accounts Receivable in the Accounts field.
  6. Enter the amount.
  7. Click Save and close.
    makebankdeposit.PNG

Then, go back to the customer's profile and record the payment from there. Just click the Receive payment, then link the invoice and the payment. Please see the attached screenshot below for your guidance.
linktheinvoiceandthedeposit.PNG

 

If there's anything else you need, please leave a comment below and I'd be glad to help you out.

Need to get in touch?

Contact us