There are sales that require, or should require, an up-front deposit from the customer. Perhaps we need a guarantee that if we place a special order for someone, we won’t be stuck with it when they never return to complete the sale.
Sometimes we agree to do a job, a big one, and feel we need a guarantee that this particular customer is serious. They’ll really put up the cash in order to gain the services we sell.
There may be other reasons. The point is, from time to time it is advisable to make a sale and receive a partial payment up front.
QuickBooks Online (QBO) has a special mechanism built into the software just for this purpose. It is a feature that, if you want to use it, you must turn it on in Settings.
Click on the gear icon.
Select Company Settings, then the section labeled Sales.
The lower arrow points to the specific setting that must be selected. Without this, you will not be able to use the feature that enables taking a deposit with an invoice.
Once this setting is live, a new field appears on invoice forms.
The above screenshot is the bottom half of an invoice created for a customer. The sample company, Craig’s Design and Landscaping Company, is going to do some cement work for one of their customers.
The job will cost $975, but the company is requiring a deposit of $350 before completing the project.
You can see this on the invoice. The amount is $975, but the deposit field, where the arrow points, has been filled in with the $350 required amount.
Once this invoice is saved, QBO will post the entire $975 to income. It will also post the $350 as a payment to Undeposited Funds and the remaining $625 to accounts receivable.
Let’s go one more step and see how this looks when it comes time to record the customer’s final payment of $625.
Note that in the receive payments window the invoice shows at the $625, after deposit, amount.
For a few, there could be timing issues with this depending on how long after invoicing the job is actually completed. But, accountants generally have to deal with this type of scenario in any case where work is being performed at a different time than invoicing. Check with your accounting professional if you are unsure.
Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
12401 Orange Drive #136
Davie, FL 33330
954-414-1524
hector@garciacpa.com
