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M
MNA
November 19, 2020
Question

Invoicing

  • November 19, 2020
  • 1 reply
  • 0 views

I have a client who receives money (a deposit) on work he is about to perform before an invoice has been raised.  Currently they code the money to Sales and manually record the payment on a piece of paper.  Then once the invoice is finalized they then type the deposit amount paid into the "Deposit" section on the invoice so the client knows what the balance owing is.

However, this is then causing huge problems with their records as they are effectively accounting for the deposit income twice and the bank balance is out of balance!

I have tried to work out what they should be doing online but it isn't that easy to follow!  I would have thought they should be putting the payment under the clients ledger and allocating the amount to say a prepayment liability.  Then when they generate an invoice for the client they have the option of using that amount previously allocated to them???

1 reply

AlexV
AlexV
November 19, 2020

Good to see you here, MNA.

 

You're right! That money should not be treated as income and needs to be recorded in a liability account. That's what we called a retainer.

 

We'll need to set up a liability account where you'll track the amount.  Then, let's create a retainer item using the same liability account. Once done, create a sales receipt or invoice to record the deposit.

 

When it's time to record a payment, we can apply it to an open invoice or to the sales receipt. You can check the detailed steps here: Record a retainer or deposit.

 

I'll be here if you need more clarifications. QuickBooks Community is available 24/7.

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