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Community Contributor *

Receive Customer Pre payment and deposit

I went through this a couple years ago, but cannot find the old posts.

 I created an Estimate for a customer.  I then received payment to place the order for the customer. 

How can I deposit the payment and give the customer a invoice showing that the items have been paid for in advance. 

 In the past when I created an invoice from the estimate, Quick Books assumes I now have the items/equipment in stock and adds it to inventory.  When I place my order with the vendor and make the payment product items is then again increased one more increment.  There never was a straight answer on how to make this work smoothly without having to modify falsely created inventory accounting.   A Sales order does not record a deposit.  If I record a deposit it must also be shown via a customer account.  If I record a deposit which is not attached to an invoice, then how do I connect the two.

7 Comments
QuickBooks Team

Re: Receive Customer Pre payment and deposit

You’ll want to create a credit memo that would apply to an invoice, TWTCSC.

 

First, identify the customer and the bank account which this prepayment would apply to. Afterwards, create a credit memo for the amount received.

 

Here are the easy steps:

  1. From the menu, select Customers then Create Credit Memos/Refund.
  2. Choose the CUSTOMER:JOB, ITEM and enter the AMOUNT.
    (If the item is not on the list you can <Add New>.)
  3. When you click Save & Close or Save & New, an Available Credit dialog box will pop-up.
  4. Choose Apply to an invoice then OK.

The credit memo would apply to future invoices and invoices will already show as paid.

 

Reach out to me if you have other concerns about deposits. I’m here to help. 

Established Community Backer ***

Re: Receive Customer Pre payment and deposit


@TWTCSC wrote:

 

 I created an Estimate for a customer.  I then received payment to place the order for the customer. 

How can I deposit the payment and give the customer a invoice showing that the items have been paid for in advance. 

 In the past when I created an invoice from the estimate, Quick Books assumes I now have the items/equipment in stock and adds it to inventory. 

 

No, a sales invoice will not increase inventory stock, it decreases the qty on hand.

If you are talking about your vendors invoice to you his customer, that is your bill and yes entering a bill does increase stockage.

 

When I place my order with the vendor and make the payment product items is then again increased one more increment. 

 

Something is wrong if this is happening, an item on a sale, unless you use a negative qty, will decrease stock.  And for this situation there should not be a negative qty used at all

 

There never was a straight answer on how to make this work smoothly without having to modify falsely created inventory accounting.   A Sales order does not record a deposit.  If I record a deposit it must also be shown via a customer account.  If I record a deposit which is not attached to an invoice, then how do I connect the two.

 

Deposits should be handled as a liabiltiy, that is what they are unless they are non refundable

 

create a liability account called customer deposits, create a service item named the same and link it to the customer deposit liability account

 

When you receive the deposit, use a sales receipt for that customer, use the customer deposit item and enter the amount

 

Order the item from the vendor and if wanted pay for it

 

When you make the sale use an invoice, list the item(s) being sold, as the last line use the customer deposit item, enter the qty as a negative one, and the amount.  The customer pays the balance if any.

 

All that said, if you are not stocking the item, and all you do is order it to fulfill the customer order, then that should not be an inventory item.

 

Instead use a non inventory item, select the expense and income accounts on the item screen for purchasing and sales, and use that item for both purchasing and sales


 

Community Contributor *

Re: Receive Customer Pre payment and deposit


If I make an order of items non-inventory then I cannot enter it's cost from the vendor as well as the retail price. 
@Rustler wrote:

Instead use a non inventory item, select the expense and income accounts on the item screen for purchasing and sales, and use that item for both purchasing and sales


 


 

Established Community Backer ***

Re: Receive Customer Pre payment and deposit


@TWTCSC wrote:

If I make an order of items non-inventory then I cannot enter it's cost from the vendor as well as the retail price. 
@Rustler wrote:

Instead use a non inventory item, select the expense and income accounts on the item screen for purchasing and sales, and use that item for both purchasing and sales


 


 


Yes you can, once the item is on any form, PO, bill, invoice you can click on the rate block and change it as needed

Community Contributor *

Re: Receive Customer Pre payment and deposit

Seems the Quickbooks Community board doesn't save posts beyond a certain date, which means history can easily repeat itself, therefore the same mistakes are made in the future.

 

I created the invoice from the estimate.  I mistakenly explained that it increases item/stock.  As you mentioned it actually reduces the item/stock to a -1. 

 

Upon placement of the order for the equipment from the Vendor (Manufacturer) the item/stock will then be shown as 0 (Zero) instead of 1 (One). 

 

I will then have to modify items in stock to correct this error using the "Activities > Adjust Quantity/Value On Hand", then record a reason. 

 

The process should be straight forward and simple, not be a tangled labyrinth.

Community Contributor *

Re: Receive Customer Pre payment and deposit

This will still alter the items on hand from 0 (Zero) to a -1 (Negative One).  I will again have to "Adjust Quantity/Value On Hand" then record a reason. 

Established Community Backer ***

Re: Receive Customer Pre payment and deposit

@TWTCSC

 

Intuit keeps "cleaning out" their forums. That's why your older topics are gone.

 

@Catherine_B

 

Please learn from this input.

 

Here is Intuit's topic for Handling Prepayments:

QB Desktop Prepayments

 

You don't Make a credit memo until the date you want to apply the prepayment item to the Actual Invoice. Until then, you need to process that you got Money as prepayment.

 

You seem to be using Inventory functions for Custom Ordering, and Rustler is correct. That would be two-sided Noninventory item.

 

But you also get to decide if the Prepayment is the Item or not. If you were actually managing inventory, and just happened to be Out right now, and the customer needs to prepay, that isn't Prepaying Items. That is your justification for how much they need to prepay = I use an Other Charge type item, as you will read in that Article.

 

If you are a Cash Basis entity, you likely are not allowed to hold that prepayment as liability; it would link to income. Make sure to ask your own CPA about holding customer prepayments.

 

As Income, it is Income when you get it and negative Income when you use it on a credit memo for the date of the actual invoice to which you will apply it as payment against the actual sale.

 

I have an attachment of the Two Sided Noninventory Item(s) you should be using for things you do not Buy ahead, keep in stock and manage, anticipating sales. You know this is part of your problem; you pointed out you keep getting negative Quantity, because you keep trying to sell them something you do not even stock.