Taking Care of QuickBooks Prepayments
When a different type of transaction pops up, small businesses need to depend on their accounting software to maintain an organized workflow to account for every dollar. This includes the unusual situation of a new customer who has made a prepayment for an item.
When a new customer orders inventory, she may need to make a partial or whole prepayment before the item is received. This workflow must be documented properly in QuickBooks so that the accounts receivable reflects this. Let’s take a look.
In QuickBooks, create an account called “Prepaid Customers” which will be a liability account. When documenting the deposit for prepayments, deposit the amount straight into this account. Code it as “Prepaid Customers.”
Go into “Customer” and click “Create Credit Memo Refund.” Once you do this, create a “Credit Memo” to that customer for the amount that is on the check.
Then, create an item code which will reference the “Prepaid Customers.”
When you have done this, simply create the credit memo using this item code:
Your “Prepaid Customer” account should now be at zero.
This prepayment has now been accounted for and the account is up to date.
- Once the inventory item has been received
- The client has been invoiced
- It will need to be entered into the software
Skipping over the vendor/bill steps, go ahead and enter the invoice now. Click on “Customer” and then “Enter Invoice.”
Once it has been created, you will need to apply the prepayment. This is done by either the software recognizing that a prepayment has already been made, or you can select the top button to “apply credits” to that invoice.
Now click done. You’re all set!
If you get more prepayments in, continue adding them so the credits are applied and the balance remains up to date.
For more information on prepayments and new QuickBooks features, don’t hesitate to ask for help!