This question has been flagged

Our products take weeks to make and are specific to each order.

We hold inventory for months as Customers only require smaller quantities.

  • We charge our Customers a down payment or deposit of 50% of the total order value.
  • Once products are available we ship and charge 50% of the unit price.
  • We want to recognize 100% of the revenue even though we charge 50% of the unit price.

What is the best way to set this up?

Avatar
Discard
Best Answer

1. Create a "Down payment (percentage)" Invoice for 50% from the big Sales Order

2. Create a "Regular Invoice" for what has shipped and add a discount line item that will credit (use up) part of the deposit:



Repeat the second step for as many smaller orders as you have


Note: In Step (1), the "income" account on the Down payment product should be configured to book to a Current Liability Account


In this worked example that follows:

  • we assume the big Sales Order is for 2,500 products sold at $10 a unit, total order amount of $25,000
  • we need a deposit of $12,500
  • we will ship and invoice products over time, selling them for $10 a unit with a $5 a unit discount.




Avatar
Discard

For "extra credit" you can create a custom field that sums the credits in the liability account for each customer (subtracting debits) and shows this on the Customer Invoice view so you can always see the unapplied deposit amount (if any) during Invoicing. Setting up a different payment term (even if still calculating at NET30) for these Customers or these Sales Orders may also make sense.