Get the Best Advance Payment Invoice Format for Financial Services

Advance payment invoice format for Financial Services

what if customers pay before you give  the product or service that you're   selling them this video will teach you  how to record that in QuickBooks Online if you have any questions about this topic you  can leave them in the comment section below and   I'll do my best to help you and of course if  you feel the video helped you I hope you will   click like and don't forget to subscribe to get  updates on new videos that come out all the time   customer deposits and pre payments basically  mean the same thing they are both a situation   where you received payment from a customer  before giving them the product or service   the service is owed to the customer until you  deliver the service we use the receive payments   window to record situations where the customer  pays in advance QuickBooks Online cannot print   a deposit receipt the way QuickBooks desktop  can if you follow the steps in the equivalent   desktop video however you could still print  your own deposit or prepayment receipt from   Excel or any other source and simply record  the transaction into quickbooks online so what   happens when the customer pays in advance well  cash or undeposited funds must increase because   you just received money from a customer and  when you receive money from a customer accounts   receivable and the customer records go down  this means if it's a new customer and this is   their first transaction they will actually have  a negative balance and that indicates that you   actually owe them until the service is rendered  the payment stays in the customer records as an   unapplied credit until you actual we do the  job and earn the income so that means at the   moment we actually deliver the service accounts  receivable goes back up from the reduced amount   that we recorded when we receive the payment and  of course because we delivered the service the   income account that we earned goes up as well at  the moment we deliver the service now the way we   record this is that we make an invoice the way  we normally would when we do a job then after   recording the invoice we use the receive payment  window to apply the new invoice we just made to   the past credit at the moment we receive the money  for example let's imagine on March 24th alain paid   us seven hundred dollars cash in advance of  a future job that is completely unrelated to   any currently open invoice we will record this  in the receive payments window we will imagine   that the money was directly deposited into the  bank account and we will not apply the payment   to any open invoice because it is meant to be  applied to a future job now here we are looking   at the Allens section of the open invoice report  before we record the payment to do this you open   the new transaction menu either click on the top  left where it says new or if you don't have that   go to the top right and click the plus sign  close to the cogwheel either one will open   the same choices in the new transaction menu and  we go to the customer column and we go down and   click receive payment now the date in our little  story for this transaction is March 24th of 2017 and we know that the customer is Alan and that the  money was deposited directly to the bank account   and that the payment method in this case was cash  the amount we receive and we type in $700 now be   careful QuickBooks will automatically put the  check mark in the top one and apply it to the   oldest invoice what you have to do is remove the  check mark so that the $700 is not applied to any   of the previous invoices because we did not do  work yet for this particular $700 as soon as we   click Save and close the most important moment is  this message this message is telling us that we   did not apply the credit or the payment to any  particular invoice and therefore if we should   save it as a credit and in this case we agree with  QuickBooks Online and we click Save as credit now   when we look at the open invoice report we see  that we have a payment that's the only showing   on the open invoice report because it has not yet  been applied to any invoice it will be applied to   the invoice that we actually got paid for at the  moment we make the invoice let's take a look and   now let's imagine on March 25th we actually did  the five editing hours that we got paid for the   day before and applied the $700 payment from  March 24th to this job first we have to click   the plus sign go over to invoice choose Alan and  of course put the date that we're doing in our   little story march 25th of 2017 in this case the  item is editing and the number of hours we did in   this example is five that makes $700 for invoice  number 22 for Allen on March 25th now when we   click Save and close which is probably the best  thing to click you can see that the invoice that   we made is still open and the payment still has  not been applied so at the very same moment you   make the invoice that you have already been paid  for you click the plus sign you go to the receive   payments window and again you choose Allen make  sure the date is the same day as the invoice that   we did the job and you have to obviously click  both the invoice that we're getting paid for as   well as the unapplied payment check them both and  only those two because the only reason that you're   in this receive payment window at the moment  you're making the invoice is to simply apply   the previously received payment to the invoice we  just made that means the actual amount received   on March 25th on the day you did the job is zero  so we click Save and close and when we go back to   the open invoice you can see both the payment  and the invoice have disappeared now before we   finish I would like to state clearly what's  good about this method of recording prepaids   and deposits from customers what's good is that  the customer records are always accurate at any   given moment and that it's easy to manage  customer data and reconcile with customers   regarding what is owed and what is used however  what is slightly imperfect about this method is   that the accounts and the chart of accounts  will be temporarily inaccurate until the work   is actually done advance payments lowers accounts  receivable instead of increasing an account called   unearned income which is a current liability but  don't worry the ledger accounts can stay slightly   inaccurate in this particular way until it's  time to report your numbers and then when you   have to if you have to report your numbers before  you actually did the work then you can make a   normal accountant adjustment to temporarily  fix your numbers until the work is done