Customer Prepayments in QuickBooks
Use this process to receive prepayments from customers for future delivery. Using this method will keep the prepayment from showing up as a credit in Accounts Receivable.- Receive a prepayment using a Sales Receipt with Prepayment item (Prepayment Item should be setup as an Other Charge pointing to a Liability account named Customer Prepayments). No other item needed. Deposit the money into your bank account.
- Enter a Sales Order (or Estimate if using QB Pro) for the entire sale including the product that was ordered and any applicable discounts. Be sure to use the applicable items.
- On the next available line, select the same prepayment item that was used on the Sales Receipt and enter as a negative number, then amount of the prepayment. (Note: This may be the entire sales order amount, or it may be a 10% prepayment, etc. The balance due on the Sales Order should reflect the amount the customer still owes. Save the Sales Order.
- When fulfilling the order, create an Invoice from the Sales Order (or Estimate). The balance due from the Sales Order will transpose to the invoice and you can now receive the remaining balance from your customer (if any). Note: This posts to income and adjusted the prepayment liability to zero.
- Monitor prepayments balances per customer using custom report (contact CleanBooks for assistance).
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