How to handle invoice deposits or pre-payments

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:

  1. From the left navigation menu, select Accounting and then Chart of Accounts.
  2. You have the option to create either a single Customer Pre-payments and Customer Credits account, where you'll then attach a customer to each pre-payment transaction, or to create a Customer Pre-payments and Customer Credits account for each customer if you find this method easier for tracking.
  3. When you'd like to record a pre-payment against an invoice, head to your Invoices page 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.

For credit memos (like deposit payments) you'll need to create a journal transaction on your Transactions page. Debit the income account where the sale was posted, and credit your Credit Memo account.

Partial payments

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.

Installment Payments

If you are accepting multiple payments or installments for your invoices, you may want to create a recurring invoice instead. Let’s take a look at some examples: 

If your terms require that your customer pay 50% of the amount owing upfront, and the remainder after completion

  1. Click on Sales > Recurring Invoices and click on Create a Recurring Invoice.

     

  2. When selecting the product and amount, make sure that it's only for half of the amount due. Complete the invoice details and then click Save and Continue.
  3. Under Schedule, select that this invoice sends a custom amount and repeats twice every day/week/month/year depending on when you require the final amount. Select the start and end dates of when both amounts are due, and Save.
  4. Select how you'd like to get paid, and whether you'd like to send the invoices automatically or manually. 
  5. Review and approve the invoice and you're done! The two invoices will automatically generate (if that was selected) and send to your customer. 

If you want to accept multiple payments for the full amount due

In this case, you'll want to create multiple recurring invoices. Note that the amounts due on each invoice must be the same (e.g. 4 invoices for 25% of the amount due).  

  1. Click on Sales > Recurring Invoices and click on Schedule a Recurring Invoice.  
  2. Select that this invoice repeats four times every day/week/month/year depending on when you require the final amount due.
  3. Select the start and end dates of when both amounts are due, respectively.
  4. When selecting the product and amount, make sure that it's only for a quarter of the amount due.  
  5. The four invoices will automatically generate and send to your customer.
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