You’re welcome 
glad I could help.
You may have to check with an accountant for specifics. It is up to you how you process deposits/invoices - whether you want to create a deposit invoice or just the total invoice if they have paid for the full event. If you are questioning for VAT purposes then I would definitely check with an accountant to make sure that you are processing correctly.
I’m not questioning for VAT purposes, and unfortunately, I can’t afford an accountant right now, so any help is very useful.
I can see in the previous topic that the payment for the deposit is tagged to the client account (Payment on account (Assign later)), not to an invoice.
“I would raise an invoice for the deposit and then raise a second invoice for the total less the deposit”
What is happening with the invoice for the deposit in this case? Remains unpaid?
You wouldn’t use both methods at once, you would either assign to a client account as a prepayment or you would raise an invoice for the deposit.
Personally I tend to use the latter method as it is easier to keep track of what is paid and what is due.
Thanks, Lurch.
What paper can I give to my client in case of the first method as proof of deposit payment?
This is the second method?
You can give them whatever you want. This is why I use the other method as the deposit invoice shows up on their statement and they can see exactly where the payment went and what it was for and it also saves me having to manually generate any other paperwork for the job.
No, this is;
Ok, Thank you.
The first method helps us to separate the deposit and the income. The deposit becomes income only when we issue the invoice and we use it as payment.
What is the solution for the second situation? How we can separate the deposit from the income if the second/final invoice will be issued, maybe, the next financial year?
I think that would be something to ask your accountant if you are wanting to hold deposits but not account for them on your books.
Thank you so much for your help by now, Lurch.
I just realized there is a solution from an accountant here…
I just need to add 2102 Other Creditors
I hope I understood right.
Functionally that seems correct but I am not an accountant so I cannot say whether that is the correct way to handle it overall.
I understand, Many thanks!
It seems, Faraday Keynes it is an accountant - https://www.faradaykeynes.co.uk/
“FaradayKeynes - Accountant
Once you get money in advance, tag them to 2102 Other Creditors and once job done move them to Income account”
Even though he is an accountant I would be hesitant to blindly follow a vague posting on the internet. You can easily find posts from people saying yes and no to any question you ask so take anything you read with a pinch of salt. Each to their own though.
When I try to add “2102 Other Creditors” I receive this… “This code is already in use”
Hi,
Other Creditors is not a nominal you would process invoices against which is why it is not showing as being one of the options in the drop down.
I think the easiest and most simple way for you to account for your deposits is to create an invoice and tag the payment to this - leaving the ‘other creditors’ alone.
I understood the deposit has to be separated from the income till the final invoice is issued (mostly if the final invoice is issued in the next financial year).
When I receive the payment (for the deposit invoice), can I state somewhere that this is a deposit, not an income? I thought lots of people do this and there is an easy solution. What I’m doing wrong?
Unfortunately, it seems that I’m more confused now then when I started the topic.
I understood there is a solution where I tag money to the client account, not to an invoice, until the invoice is issued. But, without an invoice, there is no document to send to my client to ask for the payment.
The second solution is with two invoices:
One for the deposit and another one for the final payment. If I issue the invoice for deposit in this financial year in an ordinary way and the final one in the next financial year, QuickFile will calculate the deposit as an income for this financial year, which I understood it’s not right (please correct me if I’m wrong).
It looks like two incomplete solutions.
What is missing?
I’m wrong?
There is a way to issue a receipt with QuickFile for my client when I receive the money, for the first situation (1.)?
That is correct, although it will appear on the clients account so you could send them a statement, or you could just send them a document not created in Quickfile.
That is correct again.
I’m not sure why you think this is incorrect?
Both solutions are complete financially, the only thing missing is an actual Quickfile feature to directly handle deposits but beyond that they are nothing more than prepayments/payments on account.
The easy way here is to issue a proforma invoice/receipt for the deposit, outside the accounting system. Then treat the receipt as a receipt from customer. It will sit on the customer’s account as a credit balance until you issue the invoice later.
When it comes to the annual accounts, you can enter a reversing journal entry to add to debtors (debit entry) and add to “Deposits received in advance” (credit entry) for the total of these balances o/s at the year end. By making it a reversing journal entry, it should “self-right” on the first day of the new accounting period.
I have similar format of transactions in my business. we take a deposit, an interim payment and then a final payment over a period of 6 months to a Year. We have set up cash accounting ( VAT & Profit And loss purposes) as opposed to based on Accruals.
So raise the a full invoice to the value of price agreed and start taking payments towards this invoice. This way the client also knows exactly how much they have paid and how much is due.
As for VAT and Tax - they are calculated based actual payments Received ( and not accruals )
This will also affect your Purchases, Bills and Expenses.
Thank you so much for the info up to now.
