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TriangleTutoringNC
September 1, 2022
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Advanced payment made by client on invoice

  • September 1, 2022
  • 1 reply
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After recently billing our client for service provided, she not only paid the invoice amount ($60), but also prepaid/made an advanced payment for the following two services ($120 total) on that same invoice, for a total of $180. For some reason, QBOnline isn't able to pull the invoice (gets stuck on the green loading wheel), so I took a screenshot of the "All Sales" tab under Sales instead (does not display personally identifiable information).

 

How do I properly separate the advanced payments for the follow-on two service deliveries? If possible, I'd like to create two additional invoices to account for both advanced payments to assist my partner and I in keeping the invoicing organized. 

 

If there's anything else I should be cognizant of on the backend (i.e. matching transactions and reconciling), please let me know as I am fairly new to managing the bookkeeping for my company. I did not anticipate this occurring.

 

Thank you.

 

- Ben

Best answer by Rubielyn_J

It's a pleasure to have you here, @ben11_2. Let me provide some ideas on how to handle advanced payment in QuickBooks Online.

 

We can set up a deposit or retainer process for your company in QuickBooks Online. The retainer is 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. When you invoice the customer and receive payment against it, you'll turn that liability into income.

 

To proceed, create a liability account to track the number of retainers you receive from your customers.

 

  1. Choose Settings ⚙, then click Chart of accounts.
  2. Click New.
  3. From the Account Type ▼ dropdown menu, select Other Current Liabilities.
  4. From the Detail Type ▼ dropdown menu, Trust Accounts - Liabilities.
  5. Input a Name for the account (for example, Trust Liabilities).
  6. Choose an option from the When do you want to start tracking your finances from the is account in QuickBooks? dropdown list.
  7. Click Save and Close.

 

Then, create a retainer item you can select when making an invoice or sales receipt for a deposit or retainer payment.

 

  1. Choose Settings ⚙.
  2. Select Products and services and then click 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, choose the liability account created in Step 1.
  6. Click Save and close.

 

Once done, proceed to Step 4 in this article to complete the process: Record a retainer or deposit.

 

I'm also adding this article you can utilize in the future to help combine multiple transactions into a single record so QuickBooks matches your real-life bank deposits: Record and make bank deposits in QuickBooks Online.

 

Feel free to leave a comment below if you have further concerns on how to properly separate the advanced payments in QuickBooks. I'll be around to help you. Keep safe and have a good day!

1 reply

Rubielyn_J
Rubielyn_JAnswer
September 1, 2022

It's a pleasure to have you here, @ben11_2. Let me provide some ideas on how to handle advanced payment in QuickBooks Online.

 

We can set up a deposit or retainer process for your company in QuickBooks Online. The retainer is 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. When you invoice the customer and receive payment against it, you'll turn that liability into income.

 

To proceed, create a liability account to track the number of retainers you receive from your customers.

 

  1. Choose Settings ⚙, then click Chart of accounts.
  2. Click New.
  3. From the Account Type ▼ dropdown menu, select Other Current Liabilities.
  4. From the Detail Type ▼ dropdown menu, Trust Accounts - Liabilities.
  5. Input a Name for the account (for example, Trust Liabilities).
  6. Choose an option from the When do you want to start tracking your finances from the is account in QuickBooks? dropdown list.
  7. Click Save and Close.

 

Then, create a retainer item you can select when making an invoice or sales receipt for a deposit or retainer payment.

 

  1. Choose Settings ⚙.
  2. Select Products and services and then click 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, choose the liability account created in Step 1.
  6. Click Save and close.

 

Once done, proceed to Step 4 in this article to complete the process: Record a retainer or deposit.

 

I'm also adding this article you can utilize in the future to help combine multiple transactions into a single record so QuickBooks matches your real-life bank deposits: Record and make bank deposits in QuickBooks Online.

 

Feel free to leave a comment below if you have further concerns on how to properly separate the advanced payments in QuickBooks. I'll be around to help you. Keep safe and have a good day!

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