If you work with clients on an ongoing basis, or if you're beginning a large project, you may want to accept a deposit or pre-payment from your customer. We'll walk you through how you can easily handle this type of arrangement and similar transactions.
How to account for deposits or pre-payments in Wave:
- From the left navigation menu, select Accounting > Chart of Accounts. At the top of the page, select Liabilities and Credit Cards.
- You have the option to either create a single Customer Pre-payments and Customer Credits account to categorize all deposits you receive from customers, or, you can create a Customer Pre-payments and Customer Credits account for each customer, and use these various accounts to categorize the deposits that you receive.
- In your transactions page, categorize the deposit (income transaction) to your newly created Customer Pre-payments and Customer Credits account. This will increase the pre-payment account with the amount of the deposit. If you chose to create a single Customer Pre-payments and Customer Credits account in step 2, you can use the add customer feature on these income transactions to indicate which customer this deposit is coming from.
How to record a pre-payment on a future invoice
When you'd like to record a pre-payment against an invoice, head to Sales > Invoices and select Record a payment next to your customer's invoice. For the Payment method, choose Other, and for the Payment account, choose the account you created in the second step. This method allows you to reduce the pre-payment account as you clear your receivables.
Customers can choose to pay only part of the total invoice amount. You can include payment terms in the Notes field when you create an invoice, indicating to your customer that they should pay a certain amount by a particular date, and the remainder by the due date.
If an invoice is not paid in full by the due date, its status will change from Partial to Overdue.
If you are accepting multiple payments or instalments for your invoices, you may want to create a recurring invoice instead. If you want to accept multiple payments on one regular invoice, you can - it's up to you. However, with a recurring invoice, there is no digging through past payments on a single invoice - just one payment per invoice makes tracking easier!