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Level 1

Customer prepayments for inventory items

We have some customers prepay for inventory item assemblies before the assemblies are built. When our accountant invoices the items on the sales order for the prepayment, the items are immediately subtracted from inventory and drive it to a negative inventory. This messes up our inventory and QB thinks we already shipped the items so we don't know that we still need to ship the parts. How would be the best way to handle this, create a prepayment or deposit item and assign it to a special account? then put this item on the sales order, then once we build the items and invoice against the sales order use the prepayment as a credit? Will this payment be accociated correctly with the inventory item and the COGS account be correctly applied to this inventory item?

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Best answer 12-10-2018

Accepted Solutions
Level 1

Just go to Customers -> Receive payments. Enter amount an...

Just go to Customers -> Receive payments. Enter amount and in the lower left corner click "remain as available credit". This will record payment, and it will stay as available credit. As soon as assembly will be ready and you will create an invoice - click apply credits in the upper right corner of invoice, and apply it to the invoice.

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12 Comments
Level 1

Just go to Customers -> Receive payments. Enter amount an...

Just go to Customers -> Receive payments. Enter amount and in the lower left corner click "remain as available credit". This will record payment, and it will stay as available credit. As soon as assembly will be ready and you will create an invoice - click apply credits in the upper right corner of invoice, and apply it to the invoice.

View solution in original post

Level 1

exactly what i needed and thank you so much

exactly what i needed and thank you so much
Level 15

"When our accountant invoices the items on the sales orde...

"When our accountant invoices the items on the sales order for the prepayment, the items are immediately subtracted from inventory and drive it to a negative inventory. "

Yes, that is done using an Other Charge type item, not the actual inventory item.

"Just go to Customers -> Receive payments. Enter amount and in the lower left corner click "remain as available credit". "

That creates negative AR and is not a good process to use holding this for any length of time.

You want this method, for the prepayment:

https://support.quickbooks.intuit.com/support/pages/inproducthelp/core/qb2k12/contentpackage/core/re...

And this for the application of the prepayment to the final/actual gross charges:

http://support.quickbooks.intuit.com/support/Articles/HOW12869

Anonymous
Not applicable

a sales order is non-posting and does not change inventor...

a sales order is non-posting and does not change inventory.  receive the payment from the customer and do not apply it to an invoice.  it resides as a credit on the customer account.  when the build is complete and you're ready to ship, invoice the total amount and apply the credit to the invoice.  the customer will owe you the balance.

Level 3

Re: Customer prepayments for inventory items

I met with a customer yesterday also dealing with customer deposits.  Her customers want "receipts", so posting the paying and leaving a credit will not suffice.  My best resolution is to create a Customer Deposit Account in current liabilities, then set up a Customer Deposit item that hits the account.  You invoice customer for deposit, then apply deposit received on a later invoice and it backs it out of the liability account.  The liability account also makes a very nice list of who you have deposits from if keep the account reconciled to zero.  Do not use sales receipts for this - they don't show up on customer statements.  The tricky part is remembering to apply the deposit, because QB isn't going to do it for you.  Also, using the Memo at the bottom for "Deposit Request" on invoice and "Deposit Received" on payments make nice neat notes on the statements.

Level 3

Re: Customer prepayments for inventory items

I met with a customer yesterday also dealing with customer deposits.  Her customers want receipts, so posting the paying and leaving a credit will not suffice.  My best resolution is to create a Customer Deposit Account in current liabilities, then set up a Customer Deposit item that hits the account.  You invoice customer for deposit, then apply deposit received on a later invoice and it backs it out of the liability account.  The liability account also makes a very nice list of who you have deposits from if keep the account reconciled to zero.  Do not use sales receipts for this - they don't show up on customer statements.  The tricky part is remembering to apply the deposit, because QB isn't going to do it for you.  Also, using the Memo at the bottom for Deposit Request on invoice and Deposit Received on payments make nice neat notes on the statements.

Level 3

Re: "When our accountant invoices the items on the sales orde...

Instead of using Other Charge, why not set up an inventory item that only hits Customer Deposits Liability?

Level 3

Re: "When our accountant invoices the items on the sales orde...

Please disregard prior post.  I like Other Charge better.  Having uncleared Customer Deposits on the Inventory report is  convenient and a good reminder, but most probably won't want to see that info on that report.

Anonymous
Not applicable

Re: Just go to Customers -> Receive payments. Enter amount an...

This answer makes sense but won't work for us.  Hoping there's another solution.  We use the online payment system for our customers, so we create an invoice and email to the customer.  Then they'll make payment when it's convenient to them by clicking the 'Pay Now' button that's included with the email.  Same situation, invoice removes from inventory and creates issues.  We need to create Sales Order, send to different location to ship product and then invoice after shipment is done.  Currently, after customer pays, we start from scratch and have to manually tie the sales order to the invoice or delete paid invoice, putting the payment on account and then applying to new invoice.  It's a lot of extra steps and manual handholding.  How do others handle it?

 

Is there any way to allow the customer to pay directly (not us process their payment) without creating an invoice?

Moderator

Re: Just go to Customers -> Receive payments. Enter amount an...

Hello, RisaNJ,

 

Thanks for joining the thread. Let me help share information about the process of receiving customer payments in QuickBooks Desktop.

 

If you've created Sales Order, once the work is done and you're ready to bill your customer, you can convert it into an invoice.

 

If you are using the QuickBooks Payment service upon receiving the invoice payment, once the customer pays it, the invoice will automatically close. All you have to do is to match the downloaded banking transaction to the correct transaction.

 

For more information, I’m including helpful articles you can check:

If you have further questions in managing your transactions, please feel free to visit us again. Have a great day!

Level 1

Re: Just go to Customers -> Receive payments. Enter amount an...

I do this for down payments we take on work to be done.  The problem is that months may pass before the work is completed, and during that time, the accounting period during which the deposit is received gets closed.  I have several unapplied payments hanging on customer accounts that I can't apply to invoices because CFO has closed the books.  I've asked the upper level folks to please apply the payments for me, but it doesn't get done.  I'm told it will mess up the reporting for that month (how?) and no one can figure this out.  How can I clear old deposit open balances and apply them to open invoices without reopening the books? 

Example:

Customer Tom pays $7500 down in November on future work.

Work is completed the following March.

$7500 is stuck as a payment open balance because November is closed.

Thanks in advance.

Moderator

Re: Just go to Customers -> Receive payments. Enter amount an...

Thanks for sharing a screenshot, Flygirl3000.

 

I also appreciate you for providing the complete details of your concern.  Let me help apply the deposits to the open invoices.

 

Since applying a deposit to an invoice will change your balance, we are unable to do it if your books were already closed. You would have to open it to apply the deposits. To do this, please follow the steps below:

  1. Log in as an admin in QuickBooks Desktop.
  2. Choose the Edit menu.
  3. Select Preferences, then Accounting.
  4. Under Company Preferences, select Set Date/Password.
  5. Remove the encrypted password on the Set Closing Date and Password screen.
  6. Click OK.

image.png

 

Now, you're ready to apply the deposit to the invoice. Here's how:

 

  1. Click Customers at the top, then choose Receive Payments.
  2. Select the customer's name and the invoice.
  3. Click the Apply Credits link.
  4. Choose the appropriate Available Credits on the pop-up window.
  5. Click Done, then Save & Close.

I'm including a screenshot for your reference.

image.png

Check out this article for more details on how to apply the deposit: Manage upfront deposits or retainers.

 

The steps above should help you record the payment. I'd like to make sure that you're able to resolve this concern, so please let me know how that works for you. I'll be here and ready to help anytime. Have a good one.

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