Partial Payments for jobs not ready to complete.

[Rita_C]

How do you deal with partial payments? Several of our customers pay a deposit and then the rest upon completion of the job.  The problem is I can't batch and export the invoice until the job is marked complete.  So how do I batch and export the payment to QBO? Is there a way to do this?

[michael21]

Ah...that makes sense to me now.  I missed the creation of 2 invoices in a single project outlined in step 3.  An excellent example of the old adage, "more than 1 way to skin a cat".  Thanks @kevinfow .

[michael21]

@kevinfow, I'm having a hard time understanding your accounting, probably because I don't see how you are applying the payment you received for the deposit.  What I understand from your post is that you create a task charged to the "Customer deposits" account in your ledger.  You then add one positive and one negative "Customer deposit" task to the job.  If I am understanding that correctly, then neither would export until the invoice exported and the effect would be one debit and one credit to the Customer Deposits account, thus not changing its balance at all.  So, obviously I'm missing something in your process so can you help me understand?

Thanks

[kevinfow]

@michael21 Our process works as follows.

1. Customer calls in looking for an estimate for a new HVAC system.

2. We schedule a job for a salesman to visit the customer. This job has a sales invoice that is for $0.00 because we don't charge for the salesman to go out and give an estimate.

3. The salesman then creates an estimate for the new system. If the customer accepts it the salesman "sells" the estimate. This creates an installation invoice for the job of installing the new equipment. The estimate total is reflected on this invoice. Both invoices are part of a project.

4. If the customer gives the salesman a deposit (usually 50%) the salesman adds the task "Customer Deposit" to the sales invoice in the amount of the deposit and then enters the payment. 

5. A "Customer Deposit" task is added to the installation invoice in a NEGATIVE amount of the deposit.

6. The salesman marks the sales job as completed which sets up the invoice to exported to QB. And then the sales invoice is exported. 

7. When the installation job is completed the installation invoice set up to exported and then is exported to QB

So, for example, the sales job happens on May 1 and the invoice is exported. The amount of the job is 10,000 and the deposit is 5,000. The task Customer Deposit is added to the sales invoice in the amount of 5,000 and the task Customer Deposit is added to the installation invoice in the amount of -5,0000. This increases the amount owed on the sales invoice from 0 to 5,0000 and that payment is processed by the salesman. It also reduces the amount owed on the installation invoice from 10,000 to 5,000. When the sales invoice is exported the 5,000 Customer Deposit task adds 5,000 to the Customer Deposit account.

On May 15th, when the job is completed, the installation job is exported to QB which adds 10,000 to the Retail Income account and removes 5,000 from the Customer Deposit account.

[plewis]

Hey @kevinfow ,

The workflow you outlined works for deposits, but I also wanted to make sure you are aware of a different workflow as well using the payment collections feature (Settings>Invoicing>Payment Collections> And then enable the Deposit Workflow).  https://help.servicetitan.com/how-to/how-to-payment-collection-deposit.  

This workflow works with the Quickbooks Desktop integration.

Once you setup the "Deposit Workflow" in Payment Collections you can do the following workflow when collecting deposits.  

Whenever your technician sells an estimate, instead of collecting the payment directly on the invoice of the sales job, you can collect the payment directly on the sold estimate (you cannot collect payments on unsold estimates).  The Estimate will then list out the deposit amount collected and list the correct remaining balance (the deposit collected is customer facing on the estimate as well). 

Any payment collected on a sold estimate will then be posted as a credit on the customers account.  That credit can be applied to the install invoice (and you can have ST do this automatically with some of its auto-apply rules). https://help.servicetitan.com/how-to/payment-collection-auto-apply

Once the payment is collected on the estimate, you can still export it to Quickbooks.  If you have the deposit workflow setup, that payment will go into the account ("liability account") you setup in the Deposit workflow settings. 

When that deposit is applied to the install invoice and that install invoice is exported to Quickbooks, QB will automatically take the funds out of the liability account and put them into the correct revenue account (see deposit workflow article).  

[kevinfow]

We implemented the new payment system in ServiceTitan but the new method for taking a deposit doesn't work for us. Before we set up our method of tracking deposits the problem was that the salesman would apply the down payment directly to the sales invoice. This then exported to QB as a credit on the AR (payment on a $0 invoice results in a credit.) At the end of each month we had to identify which credits were the result of a down payment on a sales invoice. 

Under this new system when the payment is applied to the sold estimate it shows in Service Titan as an "Available Credit" on the customer page. It does not show up on the installation invoice at all until it is "applied" using the Collect / Apply payment button. So when the technician goes out and actually installs the equipment and closes the job, this creates an invoice for the full amount, it does not reflect the down payment that had been made.

The only solutions is to 

1. Apply the credit before the install job is completed, which just ends up creating a credit entry on the AR (the very problem we were trying to avoid in the first place)

2. Apply the credit after the installation job is completed which means the first invoice the technician gives/shows to the customer shows that the amount owed does not reflect the deposit.

Unless there is another solution I am missing we are just going to go back to our other method.

[kevinfow]

We have created a special task called "Customer Deposit"

When the salesman sells the job that is on a "Sales Invoice" which is normally a zero dollar invoice (we don't charge for the salesman to go out and provide an estimate). When the salesman sells the estimate this creates the installation invoice with the full amount of the job on that invoice. We then enter the task "Customer Deposit" on the sales invoice in the amount of the deposit and a corresponding task of "Customer Deposit" on the installation invoice as a NEGATIVE amount. This task is set up to hit a QB account called "Customer Deposits". So when the sales invoice exports it places the revenue in the Customer Deposits account. The installation invoice total has been reduced by the amount of the deposit (because of the negative amount on the "Customer Deposit" task) and then when that invoice is exported it takes the revenue out of the Customer Deposits account and adds to the Retail Income account.

[dwhite45]

We invoice the down payment and then on the remaining job, show just the balance due. 

ORIGINAL CONTRACT: _______, LESS DOWN PAYMENT: -______, CONTRACT BALANCE: ________

We show that on both the down pmt invoice and the final job invoice.

[michael21]

And to expand on what AshleyB said, when you export the deposit or partial payment before the invoice is exported, the system will give you a warning that the invoice hasn't been exported, but you can ignore that.  The export will post to accounts receivable, creating a negative receivable, which is almost, but not quite right, because this is actually a current liability not a reduction in a current asset..  If you are not at year end, that's probably good enough.  If, however, this overlaps a period in which financial reporting is more significant, you can accumulate the total of these and book a simple journal entry to debit A/R and credit deposits payable so that your current assets and current liabilities are properly stated.

[AshleyB]

Hey Rita, You can always create a batch with just payments and export those over to QBO.