A customer deposit collects money from a customer before an invoice is issued, a booking fee, a retainer, a down payment, and holds it until a real invoice can absorb it or it is refunded. Seen here from customer management, it is the tool for taking commitment up front; its accounting life is covered in depth under Bookkeeping.
- What a customer deposit is for
- How it is raised against a customer
- How it is applied or returned
How it behaves
Raised against a customer
A deposit is a standalone document raised against a customer (optionally a project): you record how much was received and into which account. It is held as a credit to the customer, money you owe them as goods or a refund, not yet recognised as revenue. It runs Draft, Verify, Pending Payment, then Complete, with Cancel available.
Applied or returned
A deposit tracks how much of itself has been used through an applied status, Unapplied, Partially applied, or Completed. When you invoice the customer, the deposit is offset against what they owe; any unused balance can be refunded. This is what stops a deposit being forgotten or double-spent.
Edge cases and good practice
- A deposit is a liability, not income, until applied to an invoice.
- Apply it when you invoice; refund any remainder rather than leaving it stale.
- Watch the applied status so a deposit is fully used or returned.
Related
- Reference: Customer Deposits (the accounting detail)
- Reference: Invoice (where it is applied)