HOW TO RECORD ADVANCE PAYMENT FROM CUSTOMER

FASTPAY

HELLO BUSINESS MEN
HOW TO RECORD ADVANCE PAYMENT FROM CUSTOMER IN WAVE SOFTWARE. I HAVE A BUSINESS AND COULD NOT SETUP ACCOUNT . CAN ANYBODY HELP ME HERE

Mikeg

You would need to create a short term liability account for Customer Advances. When you record an amount received in advance, debit Cash and credit the Customer Advance. When you have completed the transaction (earned revenue), you would recognize the revenue by debit Customer Advance and credit Sales. This is accrual basis accounting. You recognize revenue when earned (not necessarily received) and expenses when incurred (not necessarily paid). This may be different than your method of accounting for tax purposes.

FASTPAY

Hello Mikeg,
Thank you for the response. I still have problem setting up my account with WAVE. I have a mobile popup portal where I made resellers and agents, I add fund to reseller or agent portal and they make transactions( they recharge their customers mobile, and the balance reduces accordingly). what I need to do in WAVE is to maintain ledger of individual resellers and agents.WAVE system enables me to record sales and only I can record the payment. But the case is different with my business. can you guide me in this regard.
Many thanks

Mikeg

FastPay
I not quite sure I understand your business model. Possibly use the invoicing option? Maybe one of the Admin's here can help like @Samd. Sometimes you may need the support of Excel if you are trying to track accounts. I have seen that with subscription revenue. We use Wave in conjunction with Excel and make a journal entry to recognize revenue. Best of luck.

FASTPAY

Thank You Mikeg,
I need the features like the banks give statement to their customers.I also need to prepare accounts as below format
CUSTOMER ABC
DATE................PAYMENT RECEIVED........SALES..........BALANCE
01/01/2019....................500 USD..............200 USD.......300 USD
02/01/2019..................0 USD ....................100 USD........200 USD
03/01/2019................300 USD...................50 USD.........450 USD

I JUST NEED THIS KIND OF TRANSACTION AND STATEMENT.
YOUR GUIDANCE WILL BE HIGHLY APPRECIATED
FROM NEPAL

Mikeg

Fastpay,
I would try using the invoicing feature of Wave. It does do customer statements. You can have two companies. One to do your tax reporting and one to handle the billing and customer statements. I'm not as familiar with that aspect. Check with an administrator here. I'm sorry I couldn't help anymore. Best of luck

pixelstuff

@Mikeg said:
Fastpay,
I would try using the invoicing feature of Wave. It does do customer statements. You can have two companies. One to do your tax reporting and one to handle the billing and customer statements. I'm not as familiar with that aspect. Check with an administrator here. I'm sorry I couldn't help anymore. Best of luck

@FASTPAY said:
Thank You Mikeg,
I need the features like the banks give statement to their customers.I also need to prepare accounts as below format
CUSTOMER ABC
DATE................PAYMENT RECEIVED........SALES..........BALANCE
01/01/2019....................500 USD..............200 USD.......300 USD
02/01/2019..................0 USD ....................100 USD........200 USD
03/01/2019................300 USD...................50 USD.........450 USD

I JUST NEED THIS KIND OF TRANSACTION AND STATEMENT.
YOUR GUIDANCE WILL BE HIGHLY APPRECIATED
FROM NEPAL

I made a similar request a year or so ago, and continued using my old software in the mean time, but still haven't seen any related improvements. I have customers that like to overpay (rounded amounts) and some that pay multiple invoices all at once. Wave doesn't handle either scenario very well compared to Quickbooks Online.

Quickbooks Online maintains a running customer balance and a discrete list of transactions for each customer view. So you can see the payments, invoices, and quotes all in order. If they over pay, the payment is there creating a positive balance on their account and waiting for a new invoice to be created to apply the payment to.

aamato

@Mikeg said:
You would need to create a short term liability account for Customer Advances. When you record an amount received in advance, debit Cash and credit the Customer Advance. When you have completed the transaction (earned revenue), you would recognize the revenue by debit Customer Advance and credit Sales. This is accrual basis accounting. You recognize revenue when earned (not necessarily received) and expenses when incurred (not necessarily paid). This may be different than your method of accounting for tax purposes.

@Mikeg - I understand what you have laid out but still have a question: if I need the final credit to apply to a specific customer and final invoice (advanced payment happened in one year and now needs to be applied to the next year), is there another set of debits/credits to do in Wave to get it to the actual customer's statement?

Mikeg

@aamato,
I think an administrator would have to chime in to assist with the ins and out of invoicing. Unfortunately, I not well verse with that aspect. Just the technical side of accounting. I'm guessing that you cannot make an entry to a specific customer. I personally use Excel because I have some clients that prepay for a service. Easier for me. I'm sorry I'm not able to assist much. Try one of the admins like @Barsin.

aamato

Thanks for taking the time @Mikeg to reply! After MANY trials and errors, I figured it out using a "modified" version of using Wave that aligned to a debit / credit approach, but in the end, didn't require for me to use the journal transaction function (which I was trying to do). For others, here is how I recorded the "advanced payment" of a service that had not yet been provided or even invoiced. I used pure Wave entries, avoiding having to use any transaction journal entries:

SITUATION:
I received a payment for all quarterly dues in one year which covered the last 3 quarters of that year and the first quarter of the next year. For ease, let's assume each quarter was $25. What I ended up doing:

1. Created the 3 quarterly invoices with the correct dates for the customer in the amount of $25 each.
2. Recorded the total $100 Check as 2 separate transactions: One $75 "regular" payment and one $25 Pre-Payment.
3. The $75 payment was first recorded as a deposit of $75 to the main bank account, then using the split deposit function, recorded each of the $25 payments to "Category = Outstanding Invoices in Wave," choosing each of the invoices in turn, then finally, tagging each to the customer.
4. The $25 payment was also recorded as a deposit to the main bank account (otherwise, I wouldn't have been able to reconcile the bank account that month), but instead of choosing an Outstanding Invoice in Wave (because it would not be in the system until January 1), I chose "Advanced Dues Payments - which is the account I set up as a LIABILITY account, under "Customer Prepayments and Customer Credit." This Main CPCC account type is provided by Wave. My "Advanced Dues Payments" could be called Advance Customer Payments, or whatever works for you. One could have multiple such "advance" LIABILITY accounts, if desired or needed. I need just the one to temporarily hold such funds, no matter the specific customer.
5. Using this method, the $25 "pre- advanced payment" correctly showed on my Balance Sheet as a liability through December 31.
6. I then created the January 1 invoice for the specific customer, in the amount of $25, for the Quarter 1 Dues, making sure all dates were January 1, 2019.
7. On January 1 (which I actually just did, but changed the transaction date when completing the transaction so it was dated as having occurred on January 1), I recorded another deposit of $25 but instead of to the main bank account, I recorded it to Advanced Dues Payments LIABILITY account. Then I chose the January 1, 2019 invoice as the category and again, ended the transaction by tagging it with the appropriate customer.
8. This balanced out the LIABILITY account to 0 and recorded the payments correctly for the customer when using the "Customer Statements" reports - in BOTH fiscal years - which is important to what I needed to do.
9. TIP: Leave the $25 first transaction as a plain check mark, un-reviewed, to remind you that you have to go back and adjust it with a 3rd entry at a later date.
10. Change the check mark to green (reviewed) only after you have completed the final transaction.

Hope this helps someone else!

aamato (Anna)