How to record deposit received/paid/advance payments?

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Introduction

Paying and receiving deposits is a standard business practice that most businesses are familiar with. More often than not, these deposits are issued or received even before the issuing of an invoice. Similarly, businesses may find themselves managing advance payments to and from suppliers/customers respectively. With business practices as such, one may find themselves lost in how to go about the bookkeeping for such transactions.

How to manage it in Financio?

In Financio, we've simplified and automated the way a user is able to record these deposits. The following guide will show you how you can easily record your deposit received and deposit paid in Financio.

Deposit Received (Default)

A deposit received account is created for all users by default under the current liabilities. An added payment will automatically be recorded as a deposit received under the following 2 conditions:

• Payment is applied to a Proforma Invoice.
• Payment is not applied to any Invoice or Proforma Invoice (Advance Payments).

Example 1:
[Payment applied to Proforma Invoice]
RM500 payment is received and applied on a proforma invoice (INV1008).

The journal will be recorded as follows:

Example 2:
[Payment not applied to invoice]
RM1,000 payment is received but not applied to any invoice or proforma invoice.

Similarly, the journal will be recorded as follows:

Financio will automatically perform the following reversal journal under the following scenarios:

DR: Accounts Receivable CR: Deposit Received

• Proforma Invoice has been converted into an approved invoice.
• Unapplied payments have been applied to an approved invoice.

Deposit Paid (Default)

A deposit paid account is created for all users by default under the current assets. An added payment will automatically be recorded as a deposit paid if it fulfills the following condition:

• Payment is not applied to any bill.

Example 1:
[Payment not applied to the bill]
RM500 payment is recorded and not applied to any Bill.

The journal will be recorded as follows:

Financio will automatically perform the following reversal journal under the following scenarios:

CR: Accounts Payables DR: Deposit Paid

• Unapplied payments have been applied to an approved bill.