When a customer pays a deposit for work to be performed in the future, there are two methods of recording that deposit in Successware. This article will identify the Common Method, and the Alternate Method, and review how both can be used to record customer deposits.
The Common Method works well in most situations and is more often used by our customers. This method involves recording customer deposits as unapplied cash receipts on the customer’s billing account. These deposits may create a negative customer balance. Cash receipts entered as customer deposits can be used to allocate to the invoice when the work is performed.
The Alternate Method allows you to record customer deposits as Liabilities on the Balance Sheet. This method will require you to manually track the deposits and requires more data entry.
Common Method Steps
- Post a cash receipt with an allocation type of Customer Deposit. This can be done through the customer’s billing account.
- Apply the receipt to the job invoice when the job is billed.
Common Method Step 1- Add a Deposit to the Billing Account
1. From the Main Menu, select Customer Service, and click on the Receivables Manager. Click the ellipsis on the right for your customer and select Billing Account History.
2. Select the ellipsis at the bottom of the screen and click Receipt.
3. Select Customer Deposit in the Cash Receipts screen.
4. Complete the following fields:
| Field | Function |
| Cash Box | Defaults to the register account that is marked as the default receipt account. |
| Date | Enter the date you wish the payment to post to the General Ledger. |
| Amount | Enter the actual Deposit amount. |
| Comment | Enter Notes that will help you identify the deposit. |
| Payment Method | Use the drop-down list to select the type of payment. |
5. The allocation method will default to Unapplied.
6. Click Post to save the payment.
7. The system will post a credit to the default account for Accounts Receivable and a debit to the Cash account for the cash box. The deposit will appear as an open (unallocated) item in the customer’s account.
Common Method Step 2- Apply the Deposit to the Invoice
Once you have a deposit recorded on a customer’s account you can allocate that deposit directly in the Apply Payment form of the invoice. For installation jobs, this can be done before the job is completed and the invoice will then only display the remaining balance due by the customer.
1. From the Main Menu, select Customer Service, and click on Invoice Manager. Find the invoice and click the Open Invoice option.
2. Select the Apply Pmts at the bottom of the invoice.
3. In the Existing Deposits Available section, check the box for the deposit that you would like to apply to the invoice.
4. Click the Close button. The Net Balance of the invoice will now reflect the deposit payment.
Alternate Method- Setup
The method of entering and applying customer deposits described above will show as an open payment on the customer’s account until it is applied to the job’s invoice. The only general ledger accounts affected are Cash and Accounts Receivable. That process works well in most situations. However, some companies collect many customer deposits and may wish to include them as a liability on the Balance Sheet.
The following steps describe an alternate method of entering and applying deposits in a manner that will update the Balance Sheet as the deposits are received and used.
There is some additional setup required to record customer deposits using the Alternate Method. You must set up a:
- General Ledger Account
- Sale Type
- Pricebook Item
Set Up the General Ledger Account:
1. From the Main Menu select Setup, then click General Ledger Setup.
2. Select the Account Setup tab.
3. Click the New Account button in the top right.
4. In the Account Class drop-down, select Current Liabilities.
5. Use the drop-down menu to select the category Other Current Liabilities.
6. Select an account you would like to use for Customer Deposits. Add a description, check the Active box and select Save.
Add the Sale Type:
1. From the Main Menu select Setup, then click Reference Library.
2. Select Accounting from the list of Volumes.
3. Select Sale Types.
4. Click the Add Sale Types button in the top right.
5. Enter the Sale Type and Description that you wish to use. Be sure to select the Customer Deposit account as the GL_Account.
6. Click the Save button for the line item.
Add a Customer Deposit Item to the Pricebook:
1. From the Main Menu select Purchasing, then click Price Book.
2. Select the Misc tab along the top of the screen.
3. Select a Category and Group on the right. Click the New Item button in the top right corner.
4. Enter the Item number and Description you wish to use.
5. Unmark the "Can Purchase" checkbox.
6. In the Pricing tab, add a Standard cost of 0.00.
7. Select the Sale Type that you added for customer deposits. You must also select an Expense Type in order to save the item, but the system will not use it since you will not purchase the item.
8. Select Save to finish.
Alternate Method Steps
When using the Alternate Method of entering and applying deposits you will “invoice” the deposit using the new PriceBook item. When the job is complete, you will enter a line item on the job’s invoice to “use” the deposit.
Alternate Method Step 1- Process the Receipt of the Customer Deposit
1. Add a job into the system to perform the installation or other work.
2. From the Main Menu, select Customer Service and click on Invoice Manager. Open the invoice.
3. Click the Add Item button to add a new line item.
4. Select the customer deposit Pricebook item. It should be listed as a Misc item type, and you can start typing Customer Deposit in the Description field to bring it up.
5. In the Unit Price field, enter the amount of the deposit.
6. Save the line item.
7. Click the Apply Pmts button at the bottom to record the actual receipt.
8. Enter the Amount and Method, then select Save changes to return to the Invoice.
9. Click the Post button to post the invoice.
The net result of GL posting will be a credit to your Customer Deposits account and a debit to Cash.
Alternate Method Step 2- Apply the Deposit to the Invoice
1. Once the job is complete, navigate to the Main Menu, select Customer Service and click on Invoice Manager.
2. Find the line item for the job and click the ellipsis on the right. Select Add an Invoice.
3. Save the invoice, the click Add Item to add a line item to the invoice.
4. Enter all lines items to record the sales items. Save each line item.
5. When all sales items have been recorded, click the Add Item button once more.
6. Select the customer deposit Pricebook item. It should be listed as a Misc item type, and you can start typing Customer Deposit in the Description field to bring it up.
7. In the Unit Price field, enter the amount of the deposit as a negative.
8. Save the line item.
9. Select Apply Pmts to record any additional payment received at job completion.
10. Select Post to post the invoice.
The net result of GL posting will be a debit to your Customer Deposits account for the amount of the deposit, a credit to Sales for the entire revenue amount, and a debit to Cash or Receivables.