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I have a customer that is wanting to put money on account or prepay for services. How do I do this if he wants to pay by credit card?

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QuickBooks Team

Re: I have a customer that is wanting to put money on account or prepay for services. How do I do...

Good day, @dcphillawncare.

I’m here to help record this transaction in QuickBooks Online.

When receiving money from a customer before performing any services, you need to create a retainer or deposit. The funds should be treated as a liability to show that it doesn’t belong to you until it’s used to pay for services.

To start with, you must set up a liability account to track the amount of the retainer. Here’s how:

  1. From the Chart of Accounts, click New.
  2. Select Other Current Liabilities from the Account Type drop-down.
  3. Choose Trust Accounts-Liabilities as the Detail Type.
  4. Enter the account name.
  5. Hit Save and close.

retainer 1.PNG retainer 2.PNG


Now, create a service item that you can use when accepting retainers or deposits. Let me show you how:

  1. Go to the Gear icon and select Products and Services.
  2. Choose New.
  3. Select Service from the Product/Service Information.
  4. Enter a name for the service item.
  5. From the Income Account drop-down, choose Trust Liability Account.
  6. Hit Save and close.

retainer 3.PNG retainer 4.PNG retainer 5.PNG retainer 6.PNG


Once done, you can start recording the pre-payment. Since your customer is paying using a credit card, you must have a QuickBooks Payments account to process the transaction. 


Check out this article to get started: Apply for a QuickBooks Payments account. If you already have a Payments account, follow the steps provided in this article to receive credit card payments: Process a payment in Merchant Service Center.


Right after, you have to manually record the transaction in QuickBooks using the invoice feature. 

  1. Click the Plus icon and select Invoice.
  2. Choose the Customer name.
  3. Select the Retainer item in the Product/Service column.
  4. Enter the amount received.
  5. Hit Save.

Here's an article for your reference that covers handling retainer in QuickBooks Online: How to record a retainer or deposit.


That should get you pointed in the right direction. Please know I'm only a few clicks away should you need further assistance. Take care and have a great day!