17 Nov Customer Down Payment Report
Ask the Expert – Customer Down Payment Report
Q – I receive down payments from my customers based on invoices. I am looking for an easy way to see which customers still have a down payment in the liability account. Do you have any suggestions?
A – First, let me make the assumption that you have created a down payment item that has been coded to another current liability account (see newsletter archive). This item is then used to create an invoice for the down payment and then is entered as a negative on the final invoice to “offset” the original entry. Depending on the business, this “down payment” item may be called progress payments, prepayments, customer deposits, retainer, etc. The name is not important. What is important is that this money has not been earned yet, it is simply being held to be offset against future work. For purposes of this article, we will not discuss that this money may need to be segregated into a specific “trust” account until it is earned.
The first step in creating a manageable customer down payment is to reconcile the liability account using the Banking > Reconcile. The beginning and ending balances will be zero, you will see the original customer deposit invoice and then the deduction on the final invoice in each column. Check each one and confirm the difference is zero. This will eliminate the customer activity that has already been completed from the report. The first reconciliation is usually easiest if you print the report based on the instructions below, even though it may be very long. Then manually place a checkmark on the printed report as you check the amounts on the screen. After that, if you do it regularly, it is relatively easy.
To begin, choose Reports > Accountant & Taxes > Transaction Detail by account. Next, Modify report. On the Display tab you can remove any columns you do not need. Typically, I have added the paid column (to show easily on the report if the customer has paid the deposit invoice or not). On the same tab it is possible for total by to choose customer. Click on the filter tab. For the account chose the customer down payment account. For the date choose All. For Cleared say No.
Click on the header/footer tab and change the report title to something that makes more sense to you. Click on OK. Don”t forget to memorize the report so you can easily use it in the future.