Skip to main content
C
C_Heath-Veik
December 17, 2022
Question

Client wrote check for future services in previous year

  • December 17, 2022
  • 1 reply
  • 0 views

I have one client who pays in advance for ten appointments, and she writes her check in December for the next year. She is the only one who does this, so I don't really see a need to create a new liability account for it. Last year I recorded the check as a credit to her account, but all of the transactions are now in the Unapplied Cash Payments account. I don't know how to fix that issue and I don't want to add to the problem. Can someone explain how to move transactions out of the UCP account?

 

Also, with what I have researched, it seems that recording the check in the previous year causes account issues. Should I just wait until January to cash the check and then record it as credit to her account or is there a simple way to record it now so I'm not holding her check for weeks? What is the best way to solve this problem? I don't need links to Quickbooks explainer videos on how to create new accounts or anything like that. I just would like help on how to actually fix the issue. Thanks. 

    1 reply

    M
    Mark_R
    December 20, 2022

    Hello there, @C_Heath-Veik.

     

    I'll share some information about the Unapplied Cash Payments account and how to fix it. Then, help you record the advance payments from one of your clients.

     

    The Unapplied Cash Payments account is used to report cash basis income from client payments that are received but not applied to any sales form. Since you recorded the check as a credit to your client's account, it means that they have an open balance that isn't applied to any sales form. 

     

    To resolve this, you can check out this article for the step-by-step procedure: Unapplied cash payment income on your profit and loss.

     

    On the other hand, you can record the advance payment as a retainer or deposit. It is treated as a liability. 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. Here's how:

     

    Step 1. Create a liability account

    Step 2. Create a retainer item

    Step 3. Create a trust liability bank account (Not always needed)

    Step 4. Create Sales receipt or Invoice for deposits or retainers

    Step 5. Turn retainers into credits on invoices

    Step 6. Transfer funds from your trust liability account to your operating account

     

    For the step-by-step process on each step, feel free to read this article: Record a retainer or deposit.

     

    Most importantly, I suggest seeking help from your account if you aren't sure about the process. They may provide another way of recording advance payments from your clients in QuickBooks.

     

    You may also want to run and customize reports in QuickBooks Online. This will help you focus on the details that matter the most to you, especially your sales and purchase transactions.

     

    Our Community forum is always open to help you again if you need more assistance recording advanced client payments. Wishing you continued success.

    Terms & ConditionsAccessibility statement