Ok my biggest question/issue is, when a client pays an invoice via wave - how can I attribute that payment to a prepayment liabilities account? What's the point of invoicing in wave if a client cannot pay in wave in a way that I have control over how that money is attributed? I am a wedding florist and due to COVID 99% of my 2020 weddings have been moved to 2021 and I need to change their previous payments from income to a liability. Please help me figure this out as having all this 'income' that's not really income this year is hurting my business. Please help!!!!
Flower, you're going to have to make a journal entry to move that income. Wave does not have the capacity to do it within it's structure.
Do you know how to do Journal Entries?
Hi. I am battling to understand how the processing of pre-payments work. Some customers pay before the recurring invoice is processed so at the time of the payment received there is no invoice yet. I need to know how to process a pre-payment to a customer's account so that the statement reflects the pre-payment and once the recurring invoice is processed it is then "linked" to the new invoice. Please can you give me more details on how to do this? Is there not an option in the invoicing module to process a pre-payment perhaps? Would just make this much easier. Awaiting your soonest reply please.
Ok, I think I know how to create it - so then my question becomes, when it's time for them to pay their final payment on their invoice (which I've left open and 'overdue' until 3 weeks before their wedding, when final payment is due) and move all liabilities to income - how do I do that?
a_flower
Ok, it seems to be quite simple if you have the latest version of Wave.
1. Create an account in your Chart of Accounts in Liabilities under Customer Prepayments called Deposits or Prepayments. Better yet, create a deposit account with each customer name.
2. You will have to edit your Invoices to each customer to show the issue date in 2021 and the pay by date in 2021. You can only edit Invoices if they haven't been paid so you'll have to remove any payments first.
3. Once the Invoice is issued in the right period, then manually Record a Payment on that invoice for that Customer.
4. Record the date of payment
5. Record the Amount
6. Select & record the Payment Method
7. Select the account you created step1 for Payment Account
8. You'll be able to send your customer a Receipt
9. You'll be able to send your customer a Statement of account activity to date
Sales are not recorded in this period, neither are the Deposits. Your Bank is debited with the deposits and Accounts Receivable is credited with the sales.
You have the cash. How you handle it is your business. The Sale is recorded in the next period when your customer uses the service.
I need to be clear that I enjoy Wave. I'm almost a full user leaving Square. But, I do love square's simplicity. Wave seemed simple.
I need a straight-forward step-by-step as to how to collect a deposit. I was led to believe Wave was simple. When you begin discussing journal entries, I'm reminded of T-accounts and other jargon from accounting in college. It's not my area of expertise, nor where my time is best spent. I simply can't hire a bookkeeper now.
Much like Square, does Wave or will Wave ever have the ability to simply select "Collect deposit," enter the percentage of the total bill for the job/project, etc, have that collected, then later select to request the remaining payment?
I own a video production business. When we shoot, we collect 50%. After, we collected the remaining 50% when we go to deliver the final project to the customer's satisfaction.
... does Wave or will Wave ever have the ability to simply select "Collect deposit," ...
The answer is NO.
There are two issues to be aware of:
1. Accounting and bookkeeping are arithmetic within a balanced equation. Every transaction has 2 parts.
2. A Customer list is a sub-ledger, as is a Vendor list. Wave is a General Ledger accounting platform. Sub-ledgers cost time & money to maintain.
If you wish, I can help you set up a simple and easy Customer & Deposit payment system. Contact me at kimptonb@telus.net
There are a couple of ways you could theoretically do this. The article explains how to create a liability account for your customer so you can essentially debit use this as a holding account which can then be debited into your checking account using a journal transaction. However I do believe there is another way which might be easier.
I'll paint a hypothetical picture to make this easier. You send me an invoice for $2000 for a short marketing web video. I need the video done by September 1st as a deadline, so you make the "payment due date" for the end of the project date (Sept 1). Upon receiving the invoice, you can let the client know that they need to pay %50 up front, then the remainder upon delivery. So I send you a check for $1000. You can record a $1000 deposit to that invoice which will leave an outstanding $1000 to be collected from your client. This will not reflect on your accounts receivable "accrual" report. You will need to change it to Cash basis if you're looking for accurate reporting.
Once they've paid you the final $1000 on September 1st, you can mark that toward your invoice as well.
Does this make sense or work for you as a simpler method?
Please tell me if I understand this correctly. After reading the below comments this is how I believe a pre-payment (a Credit to a customer) is handled. (To be clear, I don't use the automatic bank transactions option.)
I manually enter the deposit amount under Accounting-Transactions. I enter a description: Customer Name: Pre-payment and the amount deposited. Then I select the account from Liabilities/Credit Cards (Customer Pre-payments and Customer Credits) I created in my chart of accounts and add the customer name. Then I have the option to add information in the notes section, i.e. Pre-payment from customer.
Next, I create an invoice in the amount the customer sent, save it as a draft. When the customer uses the services I provide, I manually enter a payment (Record A Payment, Payment Method: Other, Payment Account: Customer Pre-payment/Credit and the amount used toward the invoice) thus making it appear as a partial payment. I change the due date as necessary until the invoice has been "paid in full." At this point the invoice can then be marked "paid."
I too am having an issue with my Liabilities/Credit account (Pre-payment/Credit) to show up in the drop-down menu when trying to apply a manual payment. See Rezinate's post dated March 3, 2020.
However, the Customer's Name does appear. Has this issue been resolved? Do I need a ticket for this issue? If so, how do I get one? I am new to using Wave.
Any further assistance in this matter is greatly appreciated.
I think you've got it Neked!
Couple things to think about:
1. You can create an Estimate rather than a draft Invoice. You can print your Estimate off for your client. When the time comes for payment, roll the estimate over to an Invoice; all the data is there and editable. All payments are partial payments until the Invoice is paid in full.
2. Be thoughtful with how you set up your Products & Services. Perhaps a Service might be attached to an Income account named Unearned Deposits. Once a Draft invoice or an Estimate is converted to an Invoice the full amount is posted as Income for that period. If some or all of the deposit amount on the now converted Invoice is for the next period then you might want an account that can track those deposit amounts.
3. The Liability Pre-payment account is for some reason haphazardly successful. If the customer's name shows up, all well and good; use it.
Overall, it seems complicated but you have the process. It's only a few more keystrokes and a few more accounts but if you follow the procedure you will have a good record.
Good luck!
@Kimpton said:
a_flower
Ok, it seems to be quite simple if you have the latest version of Wave.
1. Create an account in your Chart of Accounts in Liabilities under Customer Prepayments called Deposits or Prepayments. Better yet, create a deposit account with each customer name.
2. You will have to edit your Invoices to each customer to show the issue date in 2021 and the pay by date in 2021. You can only edit Invoices if they haven't been paid so you'll have to remove any payments first.
3. Once the Invoice is issued in the right period, then manually Record a Payment on that invoice for that Customer.
4. Record the date of payment
5. Record the Amount
6. Select & record the Payment Method
7. Select the account you created step1 for Payment Account
8. You'll be able to send your customer a Receipt
9. You'll be able to send your customer a Statement of account activity to date
I have a problem with #7. The account I created in my chart of accounts under Liabilities/Credit Cards does not show in the drop-down menu. From reading the comments below, I saw that someone else had this problem and they were able to provide screenshots of what I was also seeing.
I have submitted a query to Customer Service about this issue, with no response, I'm assuming because of COVID.
However, the customer's name does appear in the drop-down menu. Should I select that instead? In recording my transactions, I was able to included both the created account name and the customer. I just want to make sure everything adds up to the correct accounts.
@Kimpton
I guess I'm a little confused. I'm just learning how to use the program.
Honestly, I don't think the Liability account is what I want to use when reporting a payment against a customer's credit balance. That's income and is an Accounts Receivable (Asset). I don't want to add to the customer's line of credit, I want to reduce it as services are used.
Are you saying I should apply the payment to the customer's name (that appears in the drop-down menu) after I select "Other"? The invoice is already in the customer's name.
It would be helpful if I could find which chart of account the customer's name is coming from. I don't see it listed under Assets.
Neked,
When the customer pays a deposit the cash goes into the bank. All you have to do is correctly catagorize as a Customer Liability.
~~Debit Bank, Credit Customer
In the meantime you have created a Invoice that is currently unpaid and sitting in A/R.
~~Debit A/R, Credit Income
All the cash has been recorded at this time.
Now when you want the customer to pay some or all of the Invoice you reach into the Customer Liability account and pay out A/R account. This is not a cash transaction. It's just shifting or clearing liabilities.
~~Debit Customer, Credit A/R
So the answer to your question : Are you saying I should apply the payment to the customer's name (that appears in the drop-down menu) after I select "Other"?
is Yes
Hi, I have a recurring customer who has prepaid upfront for the next six months, how do i link the prepayment to the recurring, because I can only see payment due on receipt or after.
Because we can assign a customer to the original deposit/payment, it seems like we should be able to locate the prepayments by customer when we create the invoice and then go in to apply the deposit...this would keep any details associated with the initial transaction. Instead, it appears that I must open a separate browser window, find the deposit, and then on the invoice, I have to manually change the date from today's date to the date of original payment, and copy any notes for that transaction into the new action on the invoice.
Any hope of having this added as a feature? I suppose it may require WAVE to create a built-in account called "Customer Deposits, rather than the one we've created ourselves, but this would be super useful.
Hey @a_flower , the steps listed in this article will break down exactly how to record the pre-payment and then apply it to the invoice. The only thing to note is that a recurring invoice is like an invoice scheduler which creates singular invoices (which appear in your Invoices page). When these invoices are created, you can follow the steps outlined in the article to apply the payment.
Hi @gracenote3 , in full transparency this isn't something that the team is working on for the near future but your idea for this feature has been noted.
Here's where my issue is: Customer pays up front for a service to be delivered sometimes months down the line. On an accrual basis, I have not earned that income until I actually perform the service, it's a liability. I record the payment as a prepayment using an account named Unearned Revenue. I attach the customer's name to that prepayment transaction. Later, I perform the service, which means I have earned that previously unearned revenue. I enter a journal transaction to move that revenue from Unearned Revenue to Sales, however, I can't see any way to attach the customer name to the journal transaction. So then when I run the report "Income by Customer", the income for that job doesn't show up at all because it's only pulling from the sales account, which has no customer attached to it. I don't use Wave for my invoices, just the bookkeeping. What am I missing--how can I get that income and customer to show up in the Income By Customer report?
Great point and thanks for bringing this to our attention in the community. I wonder if you could locate the original transaction and just change the account from unearned revenue to your actual income account? This would still keep the funds in your "holding account" until the service has been provided, but then instead of migrating the funds using a journal transaction, you're simply editing the original one. Let me know if this would work for you!
Ok, so I've figured out how to manage pre-payments in Wave. (I sell packages to customers. Package of 6 treatments that will be invoiced over 6 visits/6 separate invoices). How do I find out outstanding balances - how much balance is left per customer - IF they bought a package? Unless I remember each customer who bought a package (vs. single treatment/single invoice) I don't see where any reports give me that detail. And the fact that they have deposited money doesn't show up when I print customer details. Is there somewhere that shows me that Jane Doe deposited $500 and has used $200, and still has a $300 credit?
Hi there @AmyO , thanks for your message! There are a few places to find these details. First, you can head to Sales > Customer Statements to see info on the invoices owed and paid for your customers. Next, you can head to Reports > Aged Receivables to see how much is owed from customers. There's not a way to track this from the customer's profile, only from invoices or transactions - but thank you for this idea!
Thank you for your reply, @CallieP I'm not sure if I'm doing something wrong or if I didn't ask the right question. The Customer Statement simply shows an invoice and payment made, zeros out at the bottom. It does not show that there is still a balance for that particular customer that they paid in advance - even though I attached this customer to their pre-payment amount. The accounts receivable report shows invoices created and not yet paid (very rare for me as patients pay at the time of service).
I started this issue confused. (And maybe I need to ask this somewhere else, though I think this information would be valuable to anyone accepting pre-payments.) If a patient/customer pays today for 5 future treatments (to be used at unspecified dates), the instructions on this original post say to put this money in a liability account. It seems like this would actually be an asset as it is money in my bank. (Hence my initial confusion, though I admit I am hopelessly ignorant about accounting).
I need to be able to see which customers/patients have paid for a package (have money in pre-payment) and how much they have remaining. I see I can print Reports, Account Transactions (General Ledger) for the liability account that shows kind-of that there is balance. There is no customer name associated here, and I have to click through each deposit to find the customer. Am I missing where there is a place to find (with customer name) how much each individual still has in pre-payments? Or how much is in that pre-payment liability account? Or should I be doing this differently than as suggested above?
I am confused as well. I made an account for the down payments. I do not understand how to attach it. So far, I have been making 2 invoices, 1 for the down payment and 1 for the balance due, I have been clear about the details in each invoice. I wanted to create 1 invoice total and be able to accept a credit card for a down payment and have the system automatically accept the cc payment online. I have done a partial payment over the phone by means of the partial payment option. I thought it would be super cool to be able to write 1 invoice and allow them to partially pay by the email sent by wave.
Thanks for your post here! It should be deposited into a liability account because the other side of the deposit IS going into the bank account (asset). So if you’re looking at it Debit/Credit-wise, the Debit is the bank account, and the Credit is the liability account. Another way to think about it is that if your customer gives you money for future services, you owe them those services, and any kind of debt is a liability. And to complete the transaction cycle, when you do perform the services for the customer, that money goes from the liability account to the revenue/sales account, to show that now you’ve done what they paid you for so you’ve earned the money.
The only transaction in the bank account will be the initial deposit. As you move the money over from the liability to the income account, the bank account won’t be impacted at all but you do need to select the customer prepayment (liability) account as the payment account! I.E if you’ve invoiced a customer who already paid you a deposit, you’ll have to record the payment on the invoices page as a manual payment, and select the Customer Prepayment liability account as the “Payment account”
Question to you: What are you naming your liability accounts? You could in theory create multiple liability accounts for your clients: "Barsin Prepayment" or something like this. That will allow to potentially keep better track of your client's prepayments in your reports.
thank you so much for such a great explanation of why a liability account. My brain does not "do" accounting at all! This helped tremendously!
I named the liability account "Treatment Packages." I'd rather not create a separate liability account for every patient who buys a package. I have about 25% of customers who buy packages of varying number of visits (5 up to 25 treatments). I can look at this liability account through reporting functions, but it does not give me details (how much of Jane Doe's package has she used vs how much of Joe Smith is remaining for him?). I do link a customer name to each pre-payment transaction. I just don't see a way to see the pre-payment transaction AND the amount used against that pre-payment on an individual customer basis. I'm simply keeping a sticky note in each patient's hard copy records as my quick reference, and a master list of who has sticky notes in the chart. A round-about fix for me for now.
It seems like this may be an important reporting function for other Wave users as well. Or maybe not that many do prepayments. IF there is the capability, I just was curious how to do it.
@Barsin I've done as you suggested - My client paid a deposit & I added it under liabilities as a Customer prepayment (their own account) When I invoiced them for my work this month, I recorded the payment on the invoices page as a manual payment, select their Customer Prepayment liability account as the “Payment account” & it's showing as a zero balance. YAY! ... HOWEVER, When I go to transactions instead of that income pulling from their prepayment account, it's showing as additional income & instead of my "earning" $950 from the prepaid liability, it looks like I earned $950 in ADDITION to their deposit. Same is reflected on customer statement & reports. What am I doing wrong?
Still not clear on my question. If an invoice is overdue and the client's account is actually in credit, why does it not show the payment as it does on the statement. Thanks Beryl
Hi, thank you for the deposit/pre-payment article, but I'm still facing some issues with it... does the Wave apps allows you to ''breakdown'' your payment in 2, 3 or more deposits ? If yes, I'm trying to access the ''Charts of Account'' option but it's quite unclear for me (if the client doesn't pay by credit card?) how can we make the best of it ?
Can someone please enlighten me ?
Comments
Ok my biggest question/issue is, when a client pays an invoice via wave - how can I attribute that payment to a prepayment liabilities account? What's the point of invoicing in wave if a client cannot pay in wave in a way that I have control over how that money is attributed? I am a wedding florist and due to COVID 99% of my 2020 weddings have been moved to 2021 and I need to change their previous payments from income to a liability. Please help me figure this out as having all this 'income' that's not really income this year is hurting my business. Please help!!!!
Flower, you're going to have to make a journal entry to move that income. Wave does not have the capacity to do it within it's structure.
Do you know how to do Journal Entries?
Hi. I am battling to understand how the processing of pre-payments work. Some customers pay before the recurring invoice is processed so at the time of the payment received there is no invoice yet. I need to know how to process a pre-payment to a customer's account so that the statement reflects the pre-payment and once the recurring invoice is processed it is then "linked" to the new invoice. Please can you give me more details on how to do this? Is there not an option in the invoicing module to process a pre-payment perhaps? Would just make this much easier. Awaiting your soonest reply please.
Hey Kimpton,
No I don't know how to do a journal entry, do you mind walking me through it?
Ok, I think I know how to create it - so then my question becomes, when it's time for them to pay their final payment on their invoice (which I've left open and 'overdue' until 3 weeks before their wedding, when final payment is due) and move all liabilities to income - how do I do that?
a_flower
Ok, it seems to be quite simple if you have the latest version of Wave.
1. Create an account in your Chart of Accounts in Liabilities under Customer Prepayments called Deposits or Prepayments. Better yet, create a deposit account with each customer name.
2. You will have to edit your Invoices to each customer to show the issue date in 2021 and the pay by date in 2021. You can only edit Invoices if they haven't been paid so you'll have to remove any payments first.
3. Once the Invoice is issued in the right period, then manually Record a Payment on that invoice for that Customer.
4. Record the date of payment
5. Record the Amount
6. Select & record the Payment Method
7. Select the account you created step1 for Payment Account
8. You'll be able to send your customer a Receipt
9. You'll be able to send your customer a Statement of account activity to date
Sales are not recorded in this period, neither are the Deposits. Your Bank is debited with the deposits and Accounts Receivable is credited with the sales.
You have the cash. How you handle it is your business. The Sale is recorded in the next period when your customer uses the service.
I need to be clear that I enjoy Wave. I'm almost a full user leaving Square. But, I do love square's simplicity. Wave seemed simple.
I need a straight-forward step-by-step as to how to collect a deposit. I was led to believe Wave was simple. When you begin discussing journal entries, I'm reminded of T-accounts and other jargon from accounting in college. It's not my area of expertise, nor where my time is best spent. I simply can't hire a bookkeeper now.
Much like Square, does Wave or will Wave ever have the ability to simply select "Collect deposit," enter the percentage of the total bill for the job/project, etc, have that collected, then later select to request the remaining payment?
I own a video production business. When we shoot, we collect 50%. After, we collected the remaining 50% when we go to deliver the final project to the customer's satisfaction.
... does Wave or will Wave ever have the ability to simply select "Collect deposit," ...
The answer is NO.
There are two issues to be aware of:
1. Accounting and bookkeeping are arithmetic within a balanced equation. Every transaction has 2 parts.
2. A Customer list is a sub-ledger, as is a Vendor list. Wave is a General Ledger accounting platform. Sub-ledgers cost time & money to maintain.
If you wish, I can help you set up a simple and easy Customer & Deposit payment system. Contact me at kimptonb@telus.net
Hey there @Pro_Sky_Media
There are a couple of ways you could theoretically do this. The article explains how to create a liability account for your customer so you can essentially debit use this as a holding account which can then be debited into your checking account using a journal transaction. However I do believe there is another way which might be easier.
I'll paint a hypothetical picture to make this easier. You send me an invoice for $2000 for a short marketing web video. I need the video done by September 1st as a deadline, so you make the "payment due date" for the end of the project date (Sept 1). Upon receiving the invoice, you can let the client know that they need to pay %50 up front, then the remainder upon delivery. So I send you a check for $1000. You can record a $1000 deposit to that invoice which will leave an outstanding $1000 to be collected from your client. This will not reflect on your accounts receivable "accrual" report. You will need to change it to Cash basis if you're looking for accurate reporting.
Once they've paid you the final $1000 on September 1st, you can mark that toward your invoice as well.
Does this make sense or work for you as a simpler method?
Please tell me if I understand this correctly. After reading the below comments this is how I believe a pre-payment (a Credit to a customer) is handled. (To be clear, I don't use the automatic bank transactions option.)
I manually enter the deposit amount under Accounting-Transactions. I enter a description: Customer Name: Pre-payment and the amount deposited. Then I select the account from Liabilities/Credit Cards (Customer Pre-payments and Customer Credits) I created in my chart of accounts and add the customer name. Then I have the option to add information in the notes section, i.e. Pre-payment from customer.
Next, I create an invoice in the amount the customer sent, save it as a draft. When the customer uses the services I provide, I manually enter a payment (Record A Payment, Payment Method: Other, Payment Account: Customer Pre-payment/Credit and the amount used toward the invoice) thus making it appear as a partial payment. I change the due date as necessary until the invoice has been "paid in full." At this point the invoice can then be marked "paid."
I too am having an issue with my Liabilities/Credit account (Pre-payment/Credit) to show up in the drop-down menu when trying to apply a manual payment. See Rezinate's post dated March 3, 2020.
However, the Customer's Name does appear. Has this issue been resolved? Do I need a ticket for this issue? If so, how do I get one? I am new to using Wave.
Any further assistance in this matter is greatly appreciated.
I think you've got it Neked!
Couple things to think about:
1. You can create an Estimate rather than a draft Invoice. You can print your Estimate off for your client. When the time comes for payment, roll the estimate over to an Invoice; all the data is there and editable. All payments are partial payments until the Invoice is paid in full.
2. Be thoughtful with how you set up your Products & Services. Perhaps a Service might be attached to an Income account named Unearned Deposits. Once a Draft invoice or an Estimate is converted to an Invoice the full amount is posted as Income for that period. If some or all of the deposit amount on the now converted Invoice is for the next period then you might want an account that can track those deposit amounts.
3. The Liability Pre-payment account is for some reason haphazardly successful. If the customer's name shows up, all well and good; use it.
Overall, it seems complicated but you have the process. It's only a few more keystrokes and a few more accounts but if you follow the procedure you will have a good record.
Good luck!
Kimpton
I have a problem with #7. The account I created in my chart of accounts under Liabilities/Credit Cards does not show in the drop-down menu. From reading the comments below, I saw that someone else had this problem and they were able to provide screenshots of what I was also seeing.
I have submitted a query to Customer Service about this issue, with no response, I'm assuming because of COVID.
However, the customer's name does appear in the drop-down menu. Should I select that instead? In recording my transactions, I was able to included both the created account name and the customer. I just want to make sure everything adds up to the correct accounts.
Yes, select the customer name.
Pls tell me where that amount goes afterwards.
Kimpton
@Kimpton
I guess I'm a little confused. I'm just learning how to use the program.
Honestly, I don't think the Liability account is what I want to use when reporting a payment against a customer's credit balance. That's income and is an Accounts Receivable (Asset). I don't want to add to the customer's line of credit, I want to reduce it as services are used.
Are you saying I should apply the payment to the customer's name (that appears in the drop-down menu) after I select "Other"? The invoice is already in the customer's name.
It would be helpful if I could find which chart of account the customer's name is coming from. I don't see it listed under Assets.
Neked,
When the customer pays a deposit the cash goes into the bank. All you have to do is correctly catagorize as a Customer Liability.
~~Debit Bank, Credit Customer
In the meantime you have created a Invoice that is currently unpaid and sitting in A/R.
~~Debit A/R, Credit Income
All the cash has been recorded at this time.
Now when you want the customer to pay some or all of the Invoice you reach into the Customer Liability account and pay out A/R account. This is not a cash transaction. It's just shifting or clearing liabilities.
~~Debit Customer, Credit A/R
So the answer to your question :
Are you saying I should apply the payment to the customer's name (that appears in the drop-down menu) after I select "Other"?
is Yes
Hi, I have a recurring customer who has prepaid upfront for the next six months, how do i link the prepayment to the recurring, because I can only see payment due on receipt or after.
Because we can assign a customer to the original deposit/payment, it seems like we should be able to locate the prepayments by customer when we create the invoice and then go in to apply the deposit...this would keep any details associated with the initial transaction. Instead, it appears that I must open a separate browser window, find the deposit, and then on the invoice, I have to manually change the date from today's date to the date of original payment, and copy any notes for that transaction into the new action on the invoice.
Any hope of having this added as a feature? I suppose it may require WAVE to create a built-in account called "Customer Deposits, rather than the one we've created ourselves, but this would be super useful.
Hey @a_flower , the steps listed in this article will break down exactly how to record the pre-payment and then apply it to the invoice. The only thing to note is that a recurring invoice is like an invoice scheduler which creates singular invoices (which appear in your Invoices page). When these invoices are created, you can follow the steps outlined in the article to apply the payment.
Hi @gracenote3 , in full transparency this isn't something that the team is working on for the near future but your idea for this feature has been noted.
Here's where my issue is: Customer pays up front for a service to be delivered sometimes months down the line. On an accrual basis, I have not earned that income until I actually perform the service, it's a liability. I record the payment as a prepayment using an account named Unearned Revenue. I attach the customer's name to that prepayment transaction. Later, I perform the service, which means I have earned that previously unearned revenue. I enter a journal transaction to move that revenue from Unearned Revenue to Sales, however, I can't see any way to attach the customer name to the journal transaction. So then when I run the report "Income by Customer", the income for that job doesn't show up at all because it's only pulling from the sales account, which has no customer attached to it. I don't use Wave for my invoices, just the bookkeeping. What am I missing--how can I get that income and customer to show up in the Income By Customer report?
very helpful
Hey there @Chrsfrncs
Great point and thanks for bringing this to our attention in the community. I wonder if you could locate the original transaction and just change the account from unearned revenue to your actual income account? This would still keep the funds in your "holding account" until the service has been provided, but then instead of migrating the funds using a journal transaction, you're simply editing the original one. Let me know if this would work for you!
Ok, so I've figured out how to manage pre-payments in Wave. (I sell packages to customers. Package of 6 treatments that will be invoiced over 6 visits/6 separate invoices). How do I find out outstanding balances - how much balance is left per customer - IF they bought a package? Unless I remember each customer who bought a package (vs. single treatment/single invoice) I don't see where any reports give me that detail. And the fact that they have deposited money doesn't show up when I print customer details. Is there somewhere that shows me that Jane Doe deposited $500 and has used $200, and still has a $300 credit?
Hi there @AmyO , thanks for your message! There are a few places to find these details. First, you can head to Sales > Customer Statements to see info on the invoices owed and paid for your customers. Next, you can head to Reports > Aged Receivables to see how much is owed from customers. There's not a way to track this from the customer's profile, only from invoices or transactions - but thank you for this idea!
Thank you for your reply, @CallieP I'm not sure if I'm doing something wrong or if I didn't ask the right question. The Customer Statement simply shows an invoice and payment made, zeros out at the bottom. It does not show that there is still a balance for that particular customer that they paid in advance - even though I attached this customer to their pre-payment amount. The accounts receivable report shows invoices created and not yet paid (very rare for me as patients pay at the time of service).
I started this issue confused. (And maybe I need to ask this somewhere else, though I think this information would be valuable to anyone accepting pre-payments.) If a patient/customer pays today for 5 future treatments (to be used at unspecified dates), the instructions on this original post say to put this money in a liability account. It seems like this would actually be an asset as it is money in my bank. (Hence my initial confusion, though I admit I am hopelessly ignorant about accounting).
I need to be able to see which customers/patients have paid for a package (have money in pre-payment) and how much they have remaining. I see I can print Reports, Account Transactions (General Ledger) for the liability account that shows kind-of that there is balance. There is no customer name associated here, and I have to click through each deposit to find the customer. Am I missing where there is a place to find (with customer name) how much each individual still has in pre-payments? Or how much is in that pre-payment liability account? Or should I be doing this differently than as suggested above?
I am confused as well. I made an account for the down payments. I do not understand how to attach it. So far, I have been making 2 invoices, 1 for the down payment and 1 for the balance due, I have been clear about the details in each invoice. I wanted to create 1 invoice total and be able to accept a credit card for a down payment and have the system automatically accept the cc payment online. I have done a partial payment over the phone by means of the partial payment option. I thought it would be super cool to be able to write 1 invoice and allow them to partially pay by the email sent by wave.
Hey @AmyO @MichaelFranklin
Thanks for your post here! It should be deposited into a liability account because the other side of the deposit IS going into the bank account (asset). So if you’re looking at it Debit/Credit-wise, the Debit is the bank account, and the Credit is the liability account. Another way to think about it is that if your customer gives you money for future services, you owe them those services, and any kind of debt is a liability. And to complete the transaction cycle, when you do perform the services for the customer, that money goes from the liability account to the revenue/sales account, to show that now you’ve done what they paid you for so you’ve earned the money.
The only transaction in the bank account will be the initial deposit. As you move the money over from the liability to the income account, the bank account won’t be impacted at all but you do need to select the customer prepayment (liability) account as the payment account! I.E if you’ve invoiced a customer who already paid you a deposit, you’ll have to record the payment on the invoices page as a manual payment, and select the Customer Prepayment liability account as the “Payment account”
Question to you: What are you naming your liability accounts? You could in theory create multiple liability accounts for your clients: "Barsin Prepayment" or something like this. That will allow to potentially keep better track of your client's prepayments in your reports.
thank you so much for such a great explanation of why a liability account. My brain does not "do" accounting at all! This helped tremendously!
I named the liability account "Treatment Packages." I'd rather not create a separate liability account for every patient who buys a package. I have about 25% of customers who buy packages of varying number of visits (5 up to 25 treatments). I can look at this liability account through reporting functions, but it does not give me details (how much of Jane Doe's package has she used vs how much of Joe Smith is remaining for him?). I do link a customer name to each pre-payment transaction. I just don't see a way to see the pre-payment transaction AND the amount used against that pre-payment on an individual customer basis. I'm simply keeping a sticky note in each patient's hard copy records as my quick reference, and a master list of who has sticky notes in the chart. A round-about fix for me for now.
It seems like this may be an important reporting function for other Wave users as well. Or maybe not that many do prepayments. IF there is the capability, I just was curious how to do it.
@Barsin I've done as you suggested - My client paid a deposit & I added it under liabilities as a Customer prepayment (their own account) When I invoiced them for my work this month, I recorded the payment on the invoices page as a manual payment, select their Customer Prepayment liability account as the “Payment account” & it's showing as a zero balance. YAY! ... HOWEVER, When I go to transactions instead of that income pulling from their prepayment account, it's showing as additional income & instead of my "earning" $950 from the prepaid liability, it looks like I earned $950 in ADDITION to their deposit. Same is reflected on customer statement & reports. What am I doing wrong?
Still not clear on my question. If an invoice is overdue and the client's account is actually in credit, why does it not show the payment as it does on the statement. Thanks Beryl
Hi, thank you for the deposit/pre-payment article, but I'm still facing some issues with it... does the Wave apps allows you to ''breakdown'' your payment in 2, 3 or more deposits ? If yes, I'm trying to access the ''Charts of Account'' option but it's quite unclear for me (if the client doesn't pay by credit card?) how can we make the best of it ?
Can someone please enlighten me ?