Customer Deposits Using QBO

We’ve talked about customer deposits before. There are different ways of handling this need depending on the situation. Today, we want to look at QBO’s built-in ability to work with customer deposits.

In order to use this feature in QuickBooks Online (QBO), you must turn it on in Company Settings.

Navigate to Settings (gear icon). Select Company Settings. Choose the Sales section from the left-hand panel menu.

Be sure the checkbox for Deposit is selected as in the screenshot above.

What this selection does is add a field to the invoice form in QBO. You can see that below.

Note that the customer is being invoiced for $500 in services but the invoice total is only $200. That’s a result of entering a $300 amount in the deposit field near the bottom of the invoice.

This is a very simple feature. It’s not designed to accept deposits or retainers from customers before any work is ready to be invoiced. It merely reduces the amount of the invoice.

It acts much like a payment that is received at the time of the creation of the sales form.

In other words, you would create the same accounting entry in QBO if you created the $500 invoice, then used a receive payment transaction to record the $300. Using this feature though, you can do that in one transaction rather than two.

In the customer center (shown above), one can see the invoice just completed showing an invoice amount of $500 and open balance of $200.

If you use this, just be sure to use it with customers where the invoice for services and the deposit transaction in QBO can both happen at the same time. It’s generally a bad idea to go back to previous invoices and add deposits later. Not only does it affect account balances in prior periods, but the deposit will have the date of the invoice rather than the actual date it was paid.

 

Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
7791 NW 46th St. Suite 109
Doral, FL 33166
954-414-1524
hector@garciacpa.com

 

Hector Garcia

Hector Garcia

Hector Garcia is a CPA and QuickBooks Consultant.
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