I have a non-profit client who prefers to pay upfront for a bank of development hours that can be used as required. They wanted an invoice for the upfront payment (so simple Prepayment is not suitable) and I wanted a way to manage this that did not require a separate log of the hours used and remaining. Here is how I did it:
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Create a new liability nominal in the Chart of Accounts for “Customer Prepaid Hours” selecting to “Allow this code to be used in sales invoices”
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Create new sales inventory “Sales task” item with the name Prepaid Hours and linked to the new liability nominal.
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Create and issue an invoice for prepaid hours including this sales task and the requested number of hours.
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Client pays the invoice so now “Customer Prepaid Hours” appears as a liability in the balance sheet and does not appear in “General Sales”.
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Client requests work and work is completed.
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Raise invoice for work (using “General Sales” item) but save as draft.
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Create a credit note from the prepaid hours invoice for the number of hours. I also added a text reference in the item line to the work invoice this “hours credit” related to. Select to “Hold funds on client account”.
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Go back to the invoice for the work and Log a payment. Select to “Apply from credit”. I also modified the payment instructions to confirm that paid from prepaid hours.
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I sent a separate email to the client confirming the use of prepaid hours for this invoice and advising them of the balance of hours remaining.
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The liability is reduced and will continue reducing until entire Prepaid Hours invoice is credited and replaced with work invoices.
I hope this method can help others trying to do the same thing.
