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RES005
September 7, 2022
Question

Recording receipt of advances (from lender) to be applied to customer invoice

  • September 7, 2022
  • 1 reply
  • 0 views

We have financing mechanism in place for clients.  We occasionally receive advances from the Lender prior to closing the job.  How should we record the advance payment so that is does not close out the invoice, as the revenue should not be recognized at this point?  I am thinking of creating "bank account" for "Advances" to recored th

1 reply

Adrian_A
Adrian_A
September 7, 2022

Hi RES005,

 

Yes, you can create a bank account to record the advance payments. From there, you can use the Receive Payment feature to save the payments as credits to the customers.

 

Let me guide you with these steps:

 

To create a bank account:

  1. From the Accounting tab, select Chart of Accounts.
  2. Click the New button.
  3. Fill in th details needed.
  4. Enter a descriptive name of the account to easily identify it.
  5. Select Save and Close. 

 

From there, use the Receive Payment option to record the transctions:

 

You can check this article for more guide in managing your transactions: Help Articles page.

 

Get back to me if there's anything else you need about making bank transfer in QBO. Just leave a comment below, and I'll get back to you.

R
RES005Author
September 7, 2022

Thanks.  I had another thought which I think may be more appropriate.  These advances are in effect as yet unearned income, which when realized will be booked through the individual customer invoices, likely via journal entry.  Perhaps it is more appropriate, rather than create a fictitious bank account, to book to Unearned Income, and then at the later date journal from Unearned Income to the downstream client invoice

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