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Receiving an upfront deposit from a client invoice only due in 60 days

how to post a deposit received
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QuickBooks Team

Receiving an upfront deposit from a client invoice only due in 60 days

Good day, accounts-ecofurn. I understand that you want to post a deposit on an invoice with 60-day terms in QuickBooks Online.


I'd be glad to inform you that there's a deposit or retainer process in QuickBooks Online. The deposit will be treated as a liability to show that, although your business is holding the money from a deposit or retainer, it doesn't belong to you until it's used to pay for services. 


Allow me to share the steps on how to do it in your account. 


First, create a liability account to track the amount of retainers you receive from your customers. Here's how: 


  1. Go to the Gear or Settings ⚙ and select Chart of accounts.
  2. Click New.
  3. From the Account Type ▼ dropdown menu, select Current liabilities.
  4. From the Detail Type ▼ dropdown menu, Client Trust Accounts - Liabilities.
  5. Enter a Name for the account (for example, Trust Liabilities) or accept the suggested name.
  6. Select a Default VAT Code, enter an Unpaid balance, and an as of date.
  7. Click Save and Close.


Next, create a retainer item using these steps: 


  1. Go back to the Gear or Settings ⚙ and select Products and Services.
  2. Select New.
  3. From the Product/Service information panel, select Service.
  4. Enter a name for the new product or service item (for example, Retainer).
  5. From the Income account ▼ dropdown menu, select the liability account created in Step 1.
  6. Click Save and close.


After that, create a trust liability bank account. If you keep the money in your operating account, this procedure is unnecessary. When in doubt, try to reflect on your real-world situation as much as possible.


Here's how to create the account: 


  1. Open your Chart of accounts and click New.
  2. From the Account Type ▼ dropdown menu, select Cash and cash equivalents.
  3. From the Detail Type ▼ dropdown menu, select Client trust account.
  4. Enter a Name for the account (for example, Trust Liability Bank Account) or accept the suggested name.
  5. Select a Default VAT Code, enter a Balance, and an as of date.
  6. Click Save and Close.


Once done, you can turn the retainer or deposit you previously received into credit on an invoice and receive it like a payment. Here's how:


  1. On the last line of the invoice, select the Retainer or Deposit item under the Product/Service column.
  2. Enter the retainer Amount as a negative to subtract it from the invoice. You cannot enter a retainer amount greater than the invoice total. An invoice can have a zero total, but not a negative one.
  3. Select Save and close.


This process decreases the liability account and applies the credit to the customer's invoice, converting it to income. The funds now belong to your business.


For more details on the full process of recording retainers and deposits, refer to this article: Record A Retainer Or Deposit.


I'd also like to add a couple more helpful resources on working with customer deposits and credits in QBO:



I'd be glad to join you back here if you have follow-up questions, accounts-ecofurn. The QuickBooks Community is always here to help explain concepts or processes related to customer payments.