Security Deposits
TroyG
Member Posts: 1
I rent campers or travel trailers for people to go camping. I was wondering how your payments processing would handle taking security deposits? I need to return the deposits after final return inspection. Would I actually charge them and have to return the charge dollars or would I be able to place a hold on their credit card, and then remove if there aren't any damages? This is an important part of my rental agreement processing, and is quite different from a landlord of an apartment/house, that would be holding this money for longer periods of time. Thanks
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Hi, @TroyG.
I'm not sure if the refunding from our payment processing system would be the best fit for you, as you can only refund an invoice in Wave within 60 days of the payment. Dealing with those transactions as part of your invoices would also require a bit of accounting gymnastics to move that deposit into the right type of account. While paying back that deposit might not always be possible through Wave, you can still take care of every other aspect.
Here are two ways to handle it.
Accepting the payment outside of Wave
Your rental agreement already mentions the deposit, so you don't have to make it part of the invoice. The easiest way to handle this transaction would be to accept the payment through whatever means is most convenient and record it on your Transactions page. It'd be an income transaction with your bank account as the account, and a liability account of your own creation we could call "Safety deposit".
When you pay back that deposit, you'll just have to make an expense transaction with the same account and category.
If you end up keeping the deposit, you'll have to make a journal transaction between "Safety deposit" and another account to make it clear that you do not owe that money anymore.
Accepting the deposit through Wave
In this scenario, the required deposit appears as a line item on your invoice. For easier tracking, I'd recommend using a unique income account for those deposits. It'll make things easier to parse on reports.
If you're still within that 60-day refund period, you can issue a refund by following the instructions here.
If that period has passed, you'll have to repay your clients some other way. To record it in Wave, you'll create an expense transaction categorized to "Refund for an invoice", and then choose the appropriate invoice.
Note that using this method will cause some strangeness in your accounting since your deposits will be counted as income rather than a liability.
Does this all make sense? This isn't something that's built into Wave, so handling security deposits requires a bit of work. Let me know if you have any questions or want clarifications.
I also have a business that requires refundable deposits and actually came here to post a question regarding refunds. The Wave Payments need a lot more flexibility in this regard. Aside from this specific use case, I imagine that other users need to issue refunds. Right now, you only have 60 days to refund and are limited to refunding the invoice in its entirety. This is really not useful in many cases and certainly not mine.
Does Wave plan to offer more flexibility in terms of refund windows (>60 days) and amounts (any user defined amount up to the total invoice amount)?
For now, I am forced to use other payment processors to take deposit payments. It requires extra work on my part and I would prefer to keep everything in one place.
Thanks,
Hi @TimK.
No, that isn't something that's possible with Wave at this time. Our payment processing system isn't ideal for processing refundable deposits, which, in Wave, are not best handled through invoices. Using invoices to process refundable deposits either requires you to leave those deposits as Income (which isn't accurate) or use a series of journal entries to make your books match up with reality.
Can you tell us a bit more about your business? What field do you work in? It'll give me a better idea of what to suggest as a workaround. You're still likely to have to use a different method to give those deposits back, but I could at least break down the accounting for you.
@Alexia,
Even if we aren't talking about security deposits, there still needs to be more flexibility in terms of refunds. Suppose you were a clothing wholesaler and someone ordered 2 boxes of shirts, a case of hats, and 3 boxes of shorts. You invoiced them, and they paid you. Then, 2 weeks later they decided to return a box of shorts as they only needed 2 but ordered 3. With Wave, there is no way to process this refund for part of an order....even under 60 days. The same can be applied to any business where you sell multiple items or even multiple services on the same invoice and the buyer either returns an item or cancels one of several services. I feel like this is an absolute MUST if you are going to process transactions.
Hi, @TimK.
While I can't say much about that 60-day limit, I can tell you that it's possible to issue a partial refund in Wave. When you do send a client a refund, you have the option to edit the amount manually to whatever portion of that payment you are refunding. You just have to click the "Edit amount" link.
That amount will be refunded, and it will include a proportional portion of Wave's payment processing fee (so we don't keep any money from refunded invoices).