1 Topic by kwolff (edited by kwolff 09/06/2012 03:33:21 pm)

  • Registered: 09/05/2012
  • Posts: 1

Topic: Invoicing for a Down Payment

I've been using frontaccounting for a while and several times I've been asked to 'invoice' for a down payment.  I run a consulting business and as part of the contract, the client must make a down payment in order for the project to start.  They insist on an invoice in order for them to pay my down payment.  I know this doesn't make sense, however frontaccounting allows you to enter payments by a customer without you having invoiced them.  What I want to do is have frontaccounting create an invoice that does not create a debit against a GL account.  I want this because when it comes time to bill for hours worked, I want to be able to allocate funds from the down payment at the end of the project.  How can I do this with frontaccounting, and if not, what do you suggest?

  • Registered: 12/25/2007
  • Posts: 2,448

Re: Invoicing for a Down Payment

Prepayment invoicing is not available in current FA version, however it is implemented in version 2.4 whcih is planned to be released soon.

  • From: Malta
  • Registered: 04/06/2012
  • Posts: 123

Re: Invoicing for a Down Payment

Hi Itronics,
Is the release of 2.4 with all the goodies still in the pipeline? Is there a target date?

Thanks
Carmelo

4 Reply by elax (edited by elax 05/06/2013 09:41:03 am)

  • elax
  • Senior Member
  • Offline
  • From: UK
  • Registered: 05/17/2011
  • Posts: 326

Re: Invoicing for a Down Payment

I have a similar problem, but in the other way, my supplier wants prepayment which I want be allocate on each delivery (The main problem is we usually mix the initial order in each delivery).
What I do (seems a bit complicated but works really well, however you might be able to simplify it).

When the supplier raise an pre-payment invoice
- I create an invoice which go on a prepayment account (or item). It's not related the real items I'll get. It's a 'deposit' item.
- A the same time, I create a credit-note to cancel it.

Then, (that's the clever bit), every payment I made, I allocate them on this pre-payment. I never allocate payment to the real order.
When the real invoice arrives, I pay it with the credit note (even if the payment haven't been made ).

Example
I have an order A for $100 and and order B for $1000

I create:
  a pre-payment A-P $100
     credit note A-D $100
    pre-paymint  B-P $1000
    credit note B-D $1000

At that point everything cancel each other, in theory I don't owe  anything to anybody.

Then the supplier wants me to pay 30% deposit of everything

I pay $330 which I allocate the pre-payment
at that point, I can see than I need to 70+700 $ to pay and I have $1100 (from the credit not) which I haven't allocated to anything.

Now, the supplier send  and invoice half of A and half of B (but I haven't paid anything yet).

I create the invoice corresponding to the delivery
  D1 $550

And I allocate the correspoding bit from the credit note , so at that point I have
        Amount     | Allocated       | Outstanding
A-P  $100         | 30 (deposit)   | 70
B-P  $100         | 300 (deposit) | 700
A-D  $100         | 50  (delivery)| 50
B-D $1000        | 500 (del.)     | 500
D1  $550          | 550              |

I can see easily that I have 770 outstanding to pay, and 550 left to be invoiced by the supplier.
One of the advantage of that method, is it decouples the physical payment from the invoice, so for example with the 30% deposit, I don't to worry about how to allocate them to the real delivery (should I consider that half of the 30% should be allocated to D1 ? etc ...).

With that I just allocate the deposit and payment to the order A pot. And allocate delivery from the A pot (the credit note).

Hope that will help,

/Elax