Ways to Handle Customer prepayments In QuickBooks
Do you want to perform custom work or service for your customers or take a deposit from the customer before beginning the agreed-upon project? There are some of the ways in which to accept deposits from customers before AN invoice has been created. As a QuickBooks adviser, we have to figure out workflows for unusual situations involving prepayments from customers. UN agency customers that are new to the business, they may have to prepay for inventory that they need not received. managing advancement is thus necessary that the assets and the profit and loss reports are both accurate.
Tracking customer Deposits in QuickBooks
To track these prepayments, you need to create a “Prepaid Customers” account and this would be a current liability account. you have required your customers to pay a deposit before of the product shipping, or the service being provided then you might want to use these two ways:
- Account receivable for the specific customer
- Other Current Liability accounts
You want to ask your company accountant which method is preferred. using the primary method is often easier and takes fewer steps and the second method of using a current liability account reports the prepayment in the correct class on the business’s record. If you would like to pick out the primary technique listed antecedently, you’d create a receive payment when your customer pays and not assign these payments to an invoice. In effect, this debits your Undeposited Funds account or bank account and credits assets.
If you want to select the second method, follow these some steps:
- In starting the process to create a customer Deposits account by selecting Lists and Chart of Accounts from the menu bar.
- You will Click on the “Account” button which is available at the bottom of the screen.
- Now you will select the “new” option.
- Add New Account dialog box which opens, from the another A/cTypes drop-down list.
- select the other Current Liability sort account and follow the remaining steps which are shown on the screen.
- now you create an item to be used on invoices for this prepayment from the menu bar, select Lists, and Item lists.
- Click on the “Item” button on the bottom of the list and select the “New” option.
- In new Item type drop-down list, select other Charge.
- In the Item name or number field, type a name such as customer Deposits.
- Enter any one optional description and choose the customer Deposits other current liability accounts from the drop-down list.
- Prepare your invoice to the customer for the amount of prepayment for you.
- once the customer pays, you should record the Receive Payments transaction.
- When the project is all completed and you are ready to recognize the revenue associated with the sale, create your invoice using the item that was sold to the customer.
- On the next available line of your invoice, use the customer Deposit item and only enter a negative amount at this time.
QuickBooks records the revenue in the period the sale ended, and the final invoice will be reduced by the amount of the deposit previously paid.
Using the method of describing here does have a trade-off. If you are a taxpayer, you would not expect to see a balance in your accounts receivable account when the balance sheet is prepared on the cash basis. but when you use this method, you will see AN accounts receivable balance on a cash basis balance sheet report. one of the reasons that QuickBooks reports AN assets balance on a accounting system record report when things are used that map to different record accounts. if you have any other type of issues or problems related QuickBooks you can contact at QuickBooks Tech Support Number. 24/7 services are available you can contact when you want.