What is the purpose of the delayed charge?

You've come to the right place, carol20.

I've got just the clarification that you're looking for.

Delayed charges are a way for you to keep track of items to be invoiced to clients in the future. For additional insight about this, I recommend following this article: How to Create Delayed Charge Invoices in QuickBooks

That should do it. Please keep in touch if you have additional questions about this, I've always got your back. Have a great day!

Could someone clarify the clarification? The link only describes how to create a delayed charge, not its purpose. When would one desire "to keep track of items to be invoiced to clients in the future"? 

Can someone post examples of when this would be useful? I am guessing it allows you to generate a bill, but not actually invoice it until a later date, which sounds like it doesn't post to A/R until the delayed charge is later invoiced. Does this sound right?

Can such a delayed charge be sent to a customer to request a deposit on a future job? Or, does anyone have any real-world examples of its use?

It would be my pleasure to clarify the information, hnhglpk.

A delayed charge is a non-posting transaction, which is pretty much the same way as an estimate. You record this transaction when you want to temporarily delay charging your customer or client of a product or service. Then, convert it later to an invoice.  

For example:

John doe has a landscaping business, and he does weekly cut and trims for his customer's properties. John only sends his customer an invoice on the 1st of every month, instead of sending a separate invoice every week for the job he did for them.

John records a delayed charge in QuickBooks for each weekly job he did for the customer. When it's time to invoice the customer, John added those delayed charges and then send it to his customer.

With regard to sending the delayed charge, this is unavailable in QuickBooks. Instead, you can send the invoice to your customer. 

Please let me know if there's anything else you need. We're always around to give you a helping hand. Thanks.

It sounds like delayed charge is just for tracking but not posting any actual entry to AR is that correct?  If we want income for work being done for a customer to reflect in AR prior to when the customer gets invoiced, would we just do this via a journal entry and then reverse that upon invoicing? Or what is the most efficient way to record this in QBO?  Thank you!

Hello @vconger-thehunle,

You're on the right track, delayed charges are used to track future transactions for customers and it doesn't affect the balance of your accounts receivable account.

With this, it is recommended to use the invoice in order to accurately track your customer work in line with your accounts receivable balance. Since you wish to post future work, you can proceed with the journal entry and reverse method.

However, I'd still recommend contacting your accountant for guidance when you need to start utilizing the journal entry method. If you haven't yet, you can find a local one near you with this link: Find an accountant or bookkeeper.

Additionally, I've also included this helpful reference for a compilation of articles you can use for the year-end preparations: How you can prepare for the 2020 tax season?

If there's anything else that I can help you with, please let me know by leaving any comments below. I'll be here to lend a hand.

Thanks so much for the reply!  We typically do use invoices to track receivables, the problem is some of our clients want us to hold off on invoicing them until the end of a project which could take several months, during which time each month should be accruing earned income.  Rather than create a new invoice each month (B/c our clients just want one invoice at the end), I think we will have to do the Journal Entries to CR income and DR Receivables each month to make sure we are accruing that.  The problem I see with reversing that out once the invoice is created, you are back to the initial problem where income is all going to be booked to the date the invoice is entered rather than on the month it was actually earned.  Is there not a way to link those two (the JEs for earned income and the total ending invoice at the end of a project) in QB without creating a duplicate of the AR?  Thanks!

Thanks for coming back, @vconger-thehunle,

You can link a payment journal entry to an invoice. You will only need to change the payment date if you want it to be different from the time the invoice is created. 

Here's how:

1. Go to the + New icon and choose Receive Payment.
2. Enter the name of the customer.
3. You will see both journal entries under Outstanding Transactions and Credits (reversal).
4. Update the Payment date to when you received it.
   

I also have another approach that you might want to try. If there is no invoice yet, you may set up a retainer deposit for the payment, and apply it at a later time. Here are the steps to do that:

Step 1: Create a trust liability bank account: (optional)

1. Go to the Gear Icon then pick Chart of Accounts.
2. At the top of the screen, click New.
3. Use Bank Account for the Category Type.
4. Select Trust account under Detail Type.
5. Enter the name you want. Example: Trust Liability Bank Account, or leave the account name as is.

Step 2: Create a trust liability account:

1. Choose the Gear Icon then Chart of Accounts.
2. At the top, press New.
3. Select Other Current Liabilities under Catergory Type.
4. Use Trust Accounts – Liabilities under Detail Type.
5. Enter the name you want the hit Save.

Step 3: Create a product or service item that uses the trust liability account

1. Tap the Gear Icon then Products and Services.
2. Click the New button.
3. In the Name field, enter a description for the product or service item. Example: Retainer.
4. Click the Income Account drop-down and select a Trust Liability account.
5. Press Save.

To get more information about this and how to apply the retainer as payments, see this article: Record a retainer or deposit

If you have other questions about this, please let me know by tagging my ID. I'll be right here to help you anytime.

Thank you so much!  
I think the transactions you described below would definitely work if we received a payment prior to sending out an invoice.  The issue here is that there is neither a payment, nor an invoice, simply work being done where income for that work (even though it has not been invoiced yet or paid) needs to be attributed to the month where the work was done.  I am guessing we are going to have to create some new accounts whereby the invoice itself does not affect the income, but not sure if that is possible. Thanks for the insight!

Allow me to step in and provide you additional details regarding attributing the income in QuickBooks, vconger-thehunle.

For now, attributing the income that has not been invoiced yet or paid is currently unavailable in QuickBooks Online.

Every time you create statements and payments from your normal day to day business, such as income for services rendered, this will automatically affect the income account.

I'd suggest consulting an accountant to help and guide you on how to set this up in QuickBooks Online. Your accountant can provide more expert ways of dealing with this situation.

You might want to visit this article: Why are my income and expense transactions missing from my Profit and Loss report? This will provide you details on what are the transactions reported on this report as well as steps you need to perform in case some data is missing.

Stay in touch with us here in the Community if you have other questions about income accounts or invoices in QuickBooks Online. I’m always here to help.