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Level 1

Recording Advance Payments by customers

Hi everyone,


We bill our clients by job order, We require payment up front and we sometimes offer refunds for unsatisfactory job. We seldom have recurring customers so cannot create a customer since it will be a waste of time. I'm having a little difficulty tracking this in Quickbooks online like I want. Here is what I would like to do:


1. We receive Paypal payments in our account. 

2. Upload the transactions to Bank account (Don't want to connect QB to Paypal) 

3. Have this payment show as unearned income (Current Liabilities) for the month it is received.

4. Book Income when customer confirms the receipt. (Not through Accounts Payable)


We are on Accrual Base accounting ...Any advice?

QuickBooks Team

Recording Advance Payments by customers

We can record it as a retainer or deposit, Schazoo.


I'd like you to check this article about recording a retainer or deposit. When we record it this way, the funds will be treated as liability until it's used to pay for the job. In that article, you can also see the detailed steps on how to apply it when creating an invoice or sales receipt.


You can record the refund using the Refund receipt. Here's an article for your guide: Record a customer refund.


Also, you can match the transactions from Paypal with the transactions from QuickBooks after you've uploaded them. Here's a guide about matching and categorizing your bank transactions. Start with Step 2: Review your downloaded bank transactions.


Hope this helps. Let me know if you need anything else.

Level 1

Recording Advance Payments by customers

Thanks Alex, This reply deals with the major portion of my query. But one main thing remaining. We don't want to create customers. Is there any way that we book sales without creating customers. Like it is a cash sales. but cash is received in advance. How can we deal with this. 

Hope I'm not being a pain in the neck. 


Recording Advance Payments by customers

Hello there, @Schazoo


The program only allows you to create sales receipts to book your sales without creating customers. Just leave the Customer field blank on the transaction screen. See the screenshot below for your reference. If you prefer to use invoices, you'll first need to select your customers before saving the transactions. 



However, I recommend adding your customers first before going through the process of

recording retainers. This helps you determine which customers have outstanding and paid amounts. This also ensures their balances are up to date and your sales reports are correct. You can also consult your accountant on how to deal with your situation. He can help verify if you'll need to create customers in recording their advance payments in the program. 


To keep track your deposits or retainers, you can run the Balance Sheet report. Just find and select your trust liability account in the Liabilities section. This also lets you see all the transactions that have affected your customers' retainer balance.


I'm here anytime you have other concerns. Have a good day, @Schazoo

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