QuickBooks Desktop Enterprise 24.0 brings native customer prepayments

QuickBooks Desktop Enterprise users who take deposits before any invoice exists keep landing on one answer: the prepayment feature introduced in version 24.0. We reviewed Intuit’s recently refreshed guidance for that feature, in its Canadian English edition, and nothing in it is specific to Canada. The feature covers the whole cycle: switch it on, take the deposit, print it, apply it, report on it, and refund it if a job falls through.

The problem customer deposits create

A deposit arrives before the work does. Book it as income and you overstate revenue for something you have not delivered. Park it as an unapplied payment and your receivables ageing drifts. The correct home for the money is a liability account, because you owe the customer until the job is done. Older Desktop releases offered no clean place to put it, so bookkeepers improvised with credit memos, journal entries, and payments held against invoices that did not exist yet.

Limits to know before you switch it on

The feature has firm edges. It works only on sales orders and estimates, never on invoices or sales receipts, and it handles both progress and non-progress estimates. A prepayment cannot be edited once it has been applied to an invoice, so fix mistakes early. Multi-currency is the dealbreaker: the two cannot run together, and turning multi-currency on later switches prepayments off.

Two account rules round out the restrictions. The internal transfer account that moves money from the liability account into receivables is locked from editing. The liability dropdown also refuses sales tax accounts, so pick a plain current liability account for deposits.

Turning the feature on

Open the Edit menu and choose Preferences, then Payments, then the Company Preferences tab. Under Prepayments, open Prepayment settings and select Turn On Prepayment. Pick a liability account from the dropdown, creating a new one if needed, and confirm with OK twice. Sales orders must be enabled in your company file first; most Enterprise files have them on already.

Taking the deposit

Create and save a sales order or estimate, or open an existing one from the Transactions tab in the Customer Centre. On the form, select Receive Payments and tick the checkbox marking the amount as a prepayment on the sales order. Enter the amount and any other details, then save. The form shows the figure as prepayment applied, and the money rests in the liability account rather than in income.

Showing the deposit on the printed form

Customers often want the deposit on paper. Open the sales order or estimate and select Formatting, then Customize Data Layout, then the Footer tab. Tick Prepayments and Balance Due, and use the Layout Designer if you want to reposition them. Print as usual, and the deposit plus the remaining balance both appear on the document.

Getting the credit onto the invoice

This is the step the old workarounds fumbled. Open the sales order or estimate and select Create Invoice. The software asks whether to bill the entire order or only selected items, so choose the scope and continue. The prepayment then carries onto the invoice as a credit, and the balance due drops by the deposit. The transfer happens through the locked internal account, and you never touch a journal entry. Remember the lock: once applied, the prepayment will not accept edits.

Corrections and refunds

Before an invoice exists, a prepayment can be reopened and corrected like any other entry. After it is applied, it is fixed. When a deposit has to go back to the customer, the feature includes a refund step, and the repayment draws the money out of the liability account and closes the deposit record. The cleanest moment to refund is before invoicing, since an applied prepayment cannot be edited. Check the liability account balance afterwards so what you hold matches what is still open.

Reports that show open prepayments

Reports can list prepayments still sitting on sales orders and estimates, which is the fastest way to see which orders hold customer money. For a money-level view, look at the liability account you picked during setup. Its balance equals the customer funds you are holding, and a quick report on the account traces each deposit and where it went. Keep that account free of unrelated entries and it stays meaningful.

Where this leaves you

If you run Enterprise 24.0 or later and multi-currency is off, native prepayments remove the workaround burden from upfront deposits. On older releases, or with multi-currency switched on, the feature simply is not there, and the credit memo and journal entry routines remain the only route. Check your release number before you promise a customer that a deposit will book cleanly.