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ANSWER ID:9110

A deposit is a payment for goods or services not yet delivered. This means if you receive a payment against a sales order, it's considered a deposit.

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Just started using a new company file?

If you've taken customer deposits for orders yet to be fulfilled, you'll need to enter these pre-conversion deposits.  

How AccountRight treats customer deposits

Because no goods or services have changed hands, AccountRight treats deposits differently to other payments. A customer deposit is typically posted to a liability account because it's not yet considered business income. When the sales order is converted to an invoice, the deposit is transferred from the liability account to your trade debtors account.

To set up AccountRight to track customer deposits, or to check the liability account used for deposits, go to Setup > Linked Accounts > Sales Accounts.

Sales Linked Accounts window with deposits collected account highlighted 

Recording a customer deposit

If the deposit is paiddo this
when the order is created

enter the deposit amount in the Paid Today field on the order

Invoice with amount entered in paid today field

after the order is created

use Receive Payments to apply the deposit to the order

Receive payments window with amount applied against invoice

You can give the customer a copy of the order as a record of the deposit (open the order and click Send to then choose Email or Disk).

Deleting or reversing a deposit

How you delete the deposit depends on the sales order.

If the sales order hasn't be converted to an invoice

You can simply reverse or delete the deposit as follows:

  1. Open the order (Sales > Sales Register > Order tab > click the zoom arrow to open the order).
  2. Click History to display the payment transaction.
  3. Click the zoom arrow to open the payment transaction.
  4. Go to the Edit menu and chose Delete Payment (or Reverse Payment).

If the sales order has been converted to an invoice

You can't simply reverse or delete the deposit; the invoice will first need to be reversed. This also provides an audit trail of the transaction and allows the deposit to be refunded.

Let's step you through how to do this. The scenario we'll use is where an order has been created and a deposit applied, then the order is converted to an invoice but is subsequently cancelled.

If you need to reverse the deposit because the wrong amount has been applied, after completing the steps below you'll need to recreate the order and apply the correct deposit amount.

 

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title1. Reverse the invoice

Reversing the invoice will create a credit note for the total amount of the original order. To allow transactions to be reversed, you need to set a preference in your software. Then you can reverse the invoice.

To set the preference

  1. Go to the Setup menu and choose Preferences.
  2. Click the Security tab.
  3. Select the option Transactions CAN'T be Changed; They Must be Reversed.
    Transactions can't be changed option selected
  4. Click OK.

 

To reverse the invoice

  1. Open the invoice you want to reverse.
  2. Go to the Edit menu and choose Reverse Sale. A new transaction containing corresponding negative amounts to that of the original transaction appears.
  3. If you want, alter the date and memo.

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    If you're running on an accrual basis, ensure the date is set in the correct reporting period.

  4. Click Record Reversal. A credit note will be created for the value of the reversed invoice.
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title2a. Settle the credit (if refunding the deposit)

You can use the credit note created in the previous task to:

  • settle the outstanding balance of the original invoice (minus the deposit amount), and
  • refund the deposit.

Here's how: 

  1. Go to the Sales command centre and click Sales Register.
  2. Click the Returns and Credits tab.

  3. Click to select the credit note created above, then click Apply to Sale. A list of open invoices appears.
  4. Click to select the customer's original invoice. This invoice will have an outstanding balance of the original order amount minus the deposit.
  5. Change the Credit Amount field to match the amount left owing on the invoice.
  6. Click the Amount Applied column for the invoice. This will change the value to match the Credit Amount field.
  7. Click Record. This settles the original invoice and leaves a credit balance equal to the value of the deposit.
  8. Click to select the credit note again, then click Pay Refund.
  9. Select the account from which you want to pay the deposit refund.
  10. Click Record. This refunds the deposit component of the transaction, and settles the remaining credit.
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title2b. Settle the credit (if not refunding the deposit)

If the deposit is non-refundable, you need to:

  • create an invoice for the deposit amount (to account for the receipt of this money into business income), then
  • apply the credit note to:
    • close the deposit invoice, and
    • settle the outstanding balance of the original invoice (minus the deposit amount)

Here's how:

Create an invoice for the deposit amount

When recording the invoice, use the following details:

  • Use the Service layout.
  • Select the same customer as the original invoice.
  • Enter a Description which describes the transaction, such as Non-refundable deposit for order XXXX
  • If you're running on an accrual basis, make sure the Date is in the correct reporting period.
  • Enter the deposit amount.

Apply the credit note 

  1. Go to the Sales command centre and click Sales Register.
  2. Click the Returns and Credits tab.

  3. Click to select the credit note for the reversed invoice, then click Apply to Sale.
  4. Click to select the invoice you created for the deposit amount.
  5. Change the Credit Amount field to match the deposit value.
  6. Click the Amount Applied column for deposit invoice. This will change the value to match the Credit Amount field.
  7. Click Record. This settles the deposit component of the transaction which is now considered business income.
  8. Click to select the credit note again, then click Apply to Sale.
  9. Click to select the customer's original invoice. This invoice will have an outstanding balance of the original order amount minus the deposit.
  10. Click the Amount Applied column for the original invoice. The value will change to match the remaining balance of the credit note.
  11. Click Record. The remaining credit is applied and the original invoice is closed.
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<h2><i class="fa fa-comments"></i>&nbsp;&nbsp;FAQs</h2><br>
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titleWhat if the order was paid in full and then cancelled?

If the order was paid in full, you can treat the payment the same as a deposit. You can then follow the steps above to:

  1. Convert the order into an invoice.
  2. Reverse the invoice to create a credit.
  3. Settle the credit (based on whether or not the payment is refundable).
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titleWhy can't I find the deposit transaction, or it shows as a different amount to what I actually received?

If you recorded the deposit using Receive Payments, it's possible a value was entered as a finance charge. For help finding, deleting or reversing finance charges, see see Finding and deleting or reversing a finance charge.

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titleHow do I receive money in advance from a customer who has no sales history?

To receive money in advance from a customer with no sales history:

  1. Create a sales order for the customer.
    1. Use the Service layout.
    2. Enter the Date the prepayment was made.
    3. Specify the details of the order at line level.
    4. Enter the amount received in the Paid Today field.
    5. Record the order.
  2. Change the order to an invoice.
    1. Open the Sales Register.
    2. Click the Orders tab.
    3. Select the order and click Change to Invoice.
    4. Check the details of the invoice and click Record.
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titleRelated topics
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Entering pre-conversion deposits

Supplier deposits

Handling overpayments

Finding and deleting or reversing a finance charge