Quickbooks Online Tutorial: Client Retainers, Deposits, and Pre-Payments

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[@Laughterification]

His favorite method starts at 8:29 and is very clearly explained!

[@mohamadalrifai2305]

Thank you, Hector! As you said, it becomes tricky when you have a balance in A/R; in other words, the Liability account is not 100% correct unless if every Invoice for a deposit, is paid. Otherwise, mistakes could easily happen and customers get free money. Tip to eliminate errors: to show 'A/R Paid' column and save the customized report as Customers' Deposits. The report will give Not Paid for any invoice that has an outstanding balance.

[@ThinkOFood]

Thank you very much for the video. How about using the Estimate progress payment method? I saw that option, checked it out and it looks a bit better than the third option, where we need to look at the current liability for the balances. First, a progressed invoicing future needs to be turned on in the setting account. Then the workflow for that: Create an Estimate (as accepted) Then Create an invoice from the Estimate (a pop-up screen will appear) Choose the amount that you want to invoice as a % or $ amount or in full (in our case deposit) Click create invoice & save and close + received payment Then when the service or purchase is made in full, go to the estimate and create another invoice but now choose in the pop-up "Remaining total of all line" or "Custom" to add the tax. Save and send. When paid, receive the payment and all the invoices would be integrated with the initial Estimate that was created. Is it correct to do it that way? Just need to match the dates to the situation so the money will go to the right accounts. Thank you very much for the help, Andrey

[@generalperson5764]

I am trying to use method #2 explained in this video, the negative receivables. The issue is the deposits were dealt with in settlement at the purchase of business. So, I am not sure how the recording would be done in this case. Originally the deposits held were net off with other accounts, and only the net amount was recorded as "Other Current Liability".

[@janeh5949]

this is so so much better/easier than following the Retainer Due Retainer Applied stuff explained by 5 minute Bookkeeping guy.

[@HectorGarciaCPA]

Which 5 min bookkeeping guy?

[@debbieruss2675]

Method 3 - Prepaid Are you able to show what the customers account should look like once paid? I am showing Original Invoice, Payment, Charge 1, Invoice.

[@isabellaleniar8722]

This was very well explained! Thank you. What if you open a separate bank account just to receive the retainer from your client?

[@HectorGarciaCPA]

You can do that.. some people call that a “trust account”

[@elizabethcarpenterbayer1756]

You are a wealth of information. Your tutorials are life saving.

[@Moonstruckminded]

I have an estimate that I turned into an invoice. Is it possible to just add the new service aka "upfront deposit" at the end of the invoice with a negative amount of the deposit amount to update the accounts and invoice?

[@pamj9196]

Just sent this page link to a client. Thank you, Hector, for all your help.

[@HectorGarciaCPA]

Pam J you welcome

[@vinithaprasannan4134]

Sir I this is really informative.But can you explain the advance received from deposit method more detail.Iam beginner of quick books online.So I have small doubt.when the advance received from client , I entered as bank deposit field.Then after completing service issue an invoice ,in which invoice I enter the full amount of invoice value on the service and also show the advance received from client in the deposit field of invoice.but there is a problem of duplicate entry of advanced received

[@anothersomebody8195]

Hey Hector, you might be best off adding a third step to method #3. In QBD, Step #1 - record customer deposit liability through enter sales receipts. Step #2 - record invoice Step #3 - record credit memo from customer deposit to customer Invoice and apply credit This allows an AR aging and customer deposit report as well as tracks when deposits are applied to invoices. I say this because I'm looking for a way to show deposit liability transactions as not "open" (closed). Do you know of a way in QBD to manually mark something as closed so everything ties out and reconciles?

[@HectorGarciaCPA]

That works as well

[@pack104missionhills5]

So what do you do when a period closes and you need to change the invoice?

[@lbsaayya100]

Hi, Hector, I have received the deposit from my Customer this month for my service charges of next month. How can i make the entry this month showing customer deposit this month and apply Invoice next month?

[@Summerpeach1]

Thank you Hector for putting out these videos! Does your favorite method, #3 enable us to create a client statement? While a balance for the client is showing up on the balance sheet, There's no balance showing on a statement. Not sure if I explained this correctly!

[@HectorGarciaCPA]

No.. none of these are compatible with a statement

[@jgarb21]

I have been using what you call Method 3, but I am receiving the Customer Deposit (Retainer) into QB as a Sales Receipt instead of an Invoice with the deposit . Is using a sales Receipt the same as creating an invoice in regard to your method?

[@HectorGarciaCPA]

Same

[@janeh5949]

If I look at an Owner's Draw account dated 1/1/21 - 12/31/21, shouldn't I see the beg. balance in the account as ZERO if the drawing account was closed out properly to Capital or R.E. at 12/31/2020 ?

[@HectorGarciaCPA]

If that “proper close” is done, yes

[@BerynNeeley]

For the third option where the advance payment is recorded as a retainer or deposit, my customer account statement does not show all the invoice and payment details as I expected. With the process recommended, the customer statement shows a positive amount for the deposit/retainer invoice, negative amount for the payment of this invoice and a zero or the net amount of the actual invoice less the amount of retainer applied. On the customer statement, I expected to see the actual amounts of the service invoice and the payment of that invoice, not just the net or a zero balance if the full amount is paid. The customer needs to be able to easily trace the charges and payments on the statement. Is there another way that we could execute this process to achieve this? I will send you the statement by e-mail for you to examine.

[@HectorGarciaCPA]

This wont work in the statement

[@daksh929]

Do you have any video related with making year end provisions and pre paid expense In quickbooks online ???

[@amberjacobs1895]

Personally, my only issue with these methods is that my customers like us to email them a deposit invoice so they can pay online. Frankly, we like that, too. With these methods here, is there a way to email the customer a way to pay their deposit?

[@HectorGarciaCPA]

With an Invoice that uses an item that maps to the Customer Deposits Liability account

[@amberjacobs1895]

@@HectorGarciaCPA I'm going to try this. I'm learning QBO so I'll be back in here if I have any questions. LOL

[@alexandrospapadopoulos417]

Hi Hector, very useful video. My products are sold and usually delivered within 30 days after the deposit has been received. I require a 50% deposit upfront and the other 50% before the product ships. In my case, would it just make sense to use deposit "option 1" which recognizes the sale immediately?

[@HectorGarciaCPA]

If the item is inventory part then no... only do immediate sale recognition if is non-inventory

[@jorgefraga5045]

Hector, do you have a video like this one for QuickBooks desktop?. The second question is: Is there a report in Quickbooks that we show the prepaid payments/unearned revenue at a customer level. I wonder if in the class section when I do the deposit I have to enter the customer name to get such a report under the balance sheet by class report ?.

[@jorgefraga5045]

Hello Hector,, I just noticed that the same steps can be applied in quicbooks destop. Thanks for Video as always. You are the best !

[@md.mahfozurrahmanroni7787]

You're great. Really a big help. Thank you!

[@kimfietek6308]

Great video! Wondering how I can apply this to a private practice that requires all surgical payments prior to the day of surgery. I understand how to use method 3 described in the video, but we also need to pay a separate surgery center for the patients anesthesia and facility fee the day of the surgery. We would like our books to reflect that those two fees come out of the individuals deposit. How would I record those?

[@HectorGarciaCPA]

It’s hard to answer... probably need to look at your QB and transactions to give better advice.

[@jyuva09]

Thanks for the tutorial. I have a rental property and I am refunding a portion of security deposit back to the tenant and keeping the remainder for cleaning fees. How do I log the portion I used for the cleaning fee in qbo? Thank you!

[@HectorGarciaCPA]

Put the cleaning fee as a negative amount in a second line to adjust it.

[@jorgefraga5045]

Hello. Hector this is a great video. As always ,.....great. Question. Do you have the same thing but for QuickBooks premier .......or is it the same kind of flow that i must follow....... ?

[@HectorGarciaCPA]

I don’t.. but he workflow should be very similar.

[@khurrumwaheed292]

Thanks for the videos Hector! Really a big help. I am using the first method of receiving advance payments from a client and then invoicing at a later stage and the payment is settled against the available credit. My question is: If i have received the prepayments in my bank account and when i settle an invoice against held credit, why can i not see that payment in my bank account statement and this way my bank statement does not reconcile (the discrepancy being the amount settled against the customer advance deposit). What am I doing wrong here??

[@HectorGarciaCPA]

Khurrum Waheed you are missing that transaction make sure you enter it

[@DanielRuiz-fk2hr]

Hello Hector, I am having some difficulty. I have 3 clients under a mother company, and I want to apply prepayments made from one of the subsidiaries to the other. Subsidiary A has a credit of 1000 but I can not apply it to subsidiary B in the Customer Payment / Received From: Mother Company. If not doable there, happy to do the journal entry but need instructions. Thanks

[@HectorGarciaCPA]

Journal entry.

[@matthewreive]

Thanks for the videos Hector! At minute 16:30 you mention keeping track of the customer deposit balance, would using the delayed charge in QBO work to remind you of the deposit?

[@HectorGarciaCPA]

Or kind of could... but is not the mechanism for that.

[@DealingWithDigits]

Do you have the equivalent of this video for Desktop? Love your videos!

[@HectorGarciaCPA]

Dealing with Digits no

[@audreymagner3361]

I have a settlement received on a Contingency case. I then need to deduct the attorney fees portion and costs from the Settlement and Refund/Pay the client the remaining portion. Doing a check to the client would remove the money from the Liability account but then my Sales by Client Summary accrual report is not changed. All other retainer accounts show correctly in this account. Is there a way to correct this?

[@HectorGarciaCPA]

you can do a journal entry to correct

[@audreymagner3361]

@@HectorGarciaCPA Thank you!

[@mckennaragland5093]

for option number 2, what if they make a larger payment than what is due on the later invoice and it was only a one time transaction? how would you show a refund. i tried to do a refund receipt but it does not remove the money previously credited to the account.

[@HectorGarciaCPA]

Just wire a check to refund

[@mckennaragland5093]

@@HectorGarciaCPA even if it was a credit card charge/ refund?

[@HectorGarciaCPA]

Mckenna Ragland yes.. specially if is that.

[@timbaker6108]

For recording the customer deposit, could you not have also gone to Sales Order, Sales Receipt, or straight to the Customer Deposit Liability register? That would save me a step. Do I lose anything in the process?

[@HectorGarciaCPA]

You can’t do that.. there is no Sales Order in QBO.. and you can create a sales receipt from a customer deposit loability

[@timbaker6108]

@@HectorGarciaCPA I use Desktop Premier 2019, sorry for the confusion. To be clear, can I use a Sales Receipt vs. an Invoice using the same Item of Customer Deposit that then posts to the liability account? Also, why not post the payment directly into the register for Customer Deposit Liability and then reduce the balance when invoicing? At some point, you can reconcile the Customer Deposit Liability Account to be sure all the $$ are accounted for.

[@babarali6349]

how to treat prepayment to vendor

[@HectorGarciaCPA]

Make a check to accounts payable

[@babarali6349]

@@HectorGarciaCPA if I want payment from cash

[@raymohamed3368]

very good tutorial

[@HectorGarciaCPA]

Ray Mohamed thanks

[@raymohamed3368]

Hi Hector, I had paid for your Desktop training (about a year ago), but I don't remember the website to access it.

[@HectorGarciaCPA]

quickbooks.teachable.com

[@jeremyjgt]

You are a wizard!

[@HectorGarciaCPA]

Jeremy John Grant Tyler hehe thAnks