Manage Customer Deposits: recommended workflowLast updated on 05/12/2022
This article helps you create a Liability Account in QuickBooks and manage customer deposits in ServiceTitan. It is important to create a Liability Account because the company is often required to pay a deposit to the users for the job they have not started yet. Meantime, the users should provide goods or services to the company, or return the money back. In this case, the deposit becomes a liability for the company.
Things to know
To hold the prepayments of future jobs, create a Liability Account in QuickBooks. Use the Create liability Account in QuickBooks workflow.
You should create deposit items both in QuickBooks and ServiceTitan. To do this, use the Create a deposit item workflow.
Link the deposit item to the Liability Account. The deposit item is used to initially credit and later debit the Liability Account.
If you are accepting a deposit or pre-payment for a future job, this represents the cash portion of the transaction, but you also need to represent the liability in ServiceTitan and maintain Accounts Receivable.
If you do not add a task to balance a customer payment, this will reflect the customer with a credit balance and will show that you owe them a refund.
When you accept a deposit on an invoice, you will also need to add the associated deposit task from your Pricebook. This keeps Accounts Receivable at $0 for the customer until they are invoiced for the final completed work. It also holds the deposit in the liability account in QuickBooks until the job completion. To add a deposit, see the Collect a deposit workflow.
When you export the transactions to QuickBooks, the invoice will debit (increase) Accounts Receivable and credit (increase) the deposit liability account. Use the Export the Deposit Invoice and payment to QuickBooks workflow to see how it works in Quickbooks.
When you collect a deposit, you will need to adjust the deposit from the invoice to get the customer’s remaining balance. Use the Add negative task workflow to manually add the deposit task with a negative value for the amount of deposit you previously accepted.
When the invoice is exported from ServiceTitan to QuickBooks, the Accounts Receivable is debited (increased) by the invoice total. Income increased by $1000, the total amount of the job. The Deposit on Future Work is debited by $718 to represent the transfer of the deposit amount out of the liability account and recognize revenue on the full amount of the completed work.
Create a Liability Account in QuickBooks
In QuickBooks, go to the navigation bar and select Lists.
From the Lists dropdown, select Chart of Accounts. A new screen appears.
From the Account dropdown select New.
From the Add New Account: Choose Account Type screen, select the Other Account Types checkbox.
From the dropdown select Other Current Liability.
When you’re done, click Continue. The Add New Account screen appears.
In the Account Name field, name the account as Deposit on Future Work.
When you’re done, click Save & Close.
Create a Deposit Item
Use this workflow to create a deposit item in both QuickBooks and ServiceTitan.
To create a Deposit Item in QuickBooks:
In QuickBooks, go to the Lists and select Item List.
From the Item dropdown, select New.
From the Type dropdown, select Service.
In the Item Name/Number field, write Customer Deposit.
From the Account dropdown, select Deposit on Future Work.
When you’re done, click OK.
Use this workflow to create a deposit item in ServiceTitan:
In ServiceTitan, go to the Settings.
Search for General Ledger Accounts.
Click Add Account.
Provide the account name.
From the Type dropdown, select Liability.
From the Subtype dropdown, select Current Liability.
When you’re done, click Save.
In the Pricebook, add the deposit item you have created in ServiceTitan.
In ServiceTitan, go to the navigation bar and click Pricebook.
In the left panel, select Services.
Click Add Service.
Provide the service Code, Name, Item Description in the fields.
From the Income Account dropdown, select Deposit on Future Work.
When you’re done, click Save.
Collect a deposit
To accept a deposit or prepayment for a future job:
In ServiceTitan, go to the navigation bar and click Search.
Search for a Customer.
Click the Customer name.
In the Customer screen, click the Invoice number.
In the Invoice, click Add a payment.
Add the associated deposit task from Pricebook in case the task is done.
In the Invoice, click Add a task.
In the Name dropdown, select Customer Deposit that you have created. Note: All the fields are automatically filled in.
The invoice balance is now $0.00.
Export the Deposit Invoice and payment to QuickBooks
In the Invoice, click Batch.
From the Batch dropdown, select Post the selected batch.
From the Batch dropdown, select Export to Quickbooks Desktop.
When the invoice is exported to Quickbooks, it will debit (increase) Accounts Receivable and credit (increase) the deposit liability account.
In Quickbooks, go to the navigation bar and click Lists.
In the Lists, select Chart of Accounts.
In the Chart of Accounts screen, select the liability you have created.
Check the deposit in the Increase field.
Click the account to see the invoice.
In the Invoice, check the balance.
Check whether or not the deposit is in the undeposited fund list:
In the navigation bar, click Banking > Make Deposit.
In the Make Deposits screen, click Payments.
In the Payments to Deposit screen, select the deposit you want to fund.
Add negative task
In the invoice, click Add a Task.
In the Add a Task screen, provide the negative amount for the deposit.
Check the balance.
In Quickbooks, check that the negative Customer Deposit mapped back to the liability account debiting (decreasing) the account ending balance back to $0.00.
Important note: Some features may not be currently included in your account and additional configuration may be required. Please contact technical support for details.