How to show a customer pre-payment on an invoice.

If you accept deposits or prepayment from your customers and wish to reflect those payments and show only the outstanding balance due on your invoices, a simple customized invoice will do the trick.  Read here to find out how you can record these prepayments.

 Once the invoice has been created you can choose the Apply Credits button at the bottom of the invoice screen.

Any available credits for this customer will appear in a pop-up.  Choose the pre-payment that you recorded for this invoice.  Select Done.  In the lower right portion of your invoice screen you will see the payment amount that has been applied and the balance due on the invoice.

Your next step will be to create a customized invoice form to show this same information on your printed or e-mailed invoice.  From the invoice screen choose Customize from the invoice menu bar.  If you have a newer version of Quickbooks a pop-up window will appear asking if you want to create your own form or customize an existing form.  Choose the Customize Data Layout option.

In the customization screen choose the Footer Tab, and click the Print box for Payments/Credits and for Balance Due.

New versions of Quickbooks will automatically adjust the layout to fit these extra fields at the bottom of the invoice.  If you have an older version of Quickbooks you will need to manually adjust the layout so that your lines and boxes do not overlap.  To make the manual adjustments click on the Layout Designer button at the bottom of the customization window.

In the Layout Designer window you can click on various boxes and drag the field indicator buttons to make the box smaller.  You can also click and drag various boxes to relocate them on the invoice.  When you click on a box there will be a message in the lower left corner of the Layout Designer screen telling you what box you have clicked on...whether it is a text box, a data box, etc.  Adjust the main body of the invoice to allow room for your new footers at the bottom of the invoice.

When you are done click OK and you will see a preview window of what your invoice will look like when printed.  You can hop right back into the Layout Designer if you need to make further adjustments.   This is what your customized invoice will look like...

 Another great feature is that once you customize this invoice you don't have to repeat the process.  It remains stored in your Quickbooks.  You can even rename it so it's easier to use later.  From the Additional Customization window choose the Basic Customization tab,

...then select Manage Templates,

 

 The invoice you are customizing will appear highlighted in the Manage Templates window.  Click on the Template name in the upper right and change the name as desired.  The next time you create an invoice you simply click the Template drop down in the upper right corner and choose the invoice you wish to use.   

Again, please post comments so that answers to your questions can be addressed on the blog.  Happy Bookkeeping!

This material is for informational purposes only and not intended and financial, legal or tax advice. Please consult your finance, legal or tax professional to confirm the accuracy of all information. Quickbooks is a registered product of Intuit.

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How Do I Record A Pre-Payment From My Customer In Quickbooks

You have two options depending on how you wish to have the information appear on your balance sheet.

Method #1

The simplest way is to enter the payment in the Customer menu under "Receive Payments".  If there are invoices already entered for this customer and you do not want to apply this prepayment to those invoices, just un-check the invoice that Quickbooks auto-applied the payment to.

After you uncheck this option the Overpayment note at the bottom of the screen will disappear.  Click Save & Close and an option box will pop up on the screen.  Since this is a prepayment will want to the select OK which will save the payment to the Customers account as an un-applied payment.

Entering the pre-payment using this method will have the effect of reducing the accounts receivable balance in the Assets portion of your balance sheet.

If you need to see which customers have un-applied payments posted to their accounts you can run the A/R Aging Detail report under the Customers & Receivables section of the Reports menu.  Any un-applied payments will appear as credits (minus) on the report.

In addition, by using this method you can apply the prepayment to any Job associated with this customer by double clicking on the payment in the Customer Center and selecting the invoice(s) to apply it to.  All Jobs for a Customer will appear for a payment posted just to the Customer and not to a specific job.

Method #2

If you wish to post your Customer's prepayments to a liability account that will appear in the liabilities sections of your Balance Sheet you can do this using a Sales Receipt to record this transaction.

Step one is to create an account on your chart of accounts for the liability such as Customer Deposits.  Use the Other Current Liability account type when setting this up.  Next you will need to create an Item in the Item list to direct to pre-payment to this liability.

From the Item button on the Item list select New.  Choose the "Other Charge" Item type.

Enter the appropriate name and description for the item, choose the non-taxable tax code and select the account the you created in the chart of accounts for this liability.

 Create a sales receipt for the customer using the Sales Receipt form.  Use the Item that you created in the item list and enter the amount of the payment.

  In this way you can record the payment number the payment method, and because you are using a Sales Receipt and not an invoice the funds appear as a balance in the liabilities section of the balance sheet rather than reducing the Accounts Receivable balance on the balance sheet.  Once this Sales Receipt is created you can see the transaction on various Customer reports.  However, it will not appear in any Accounts Receivable reports.

When you are ready to apply this prepayment to a customer invoice you will need to do a journal entry to move this amount into accounts receivable.  Simply debit the Customer Deposits account and credit Accounts Receivable.  Include this Customer name in the Customer/Job column of the journal entry.  If you use Jobs under your Customer register, the journal entry to credit accounts receivable must be attached to the "Job" (in the Customer/Job column) that is being invoiced. 

To apply this prepayment to an invoice, open the invoice by double clicking on it in the Customer Center and click the Apply Credits button.  Once the available credit has been selected choose Done.

This material is for informational purposes only and not intended and financial, legal or tax advice. Please consult your finance, legal or tax professional to confirm the accuracy of all information. Quickbooks is a registered product of Intuit.

Email your question