Has anyone come up with a good way to manage customer deposits? If you have a good idea on how to manage these today let me know.

Most of my clients just add deposits to AR as unapplied cash. This isn't appropriate as deposits are a liability not a deduction from other receivables. They also mask the real outstanding balances and most banks will not accept an aged receivable report with lots of credit balances (deposits) on it. Later, after the invoice is posted, they have to do another cash batch to apply the unapplied deposit.

Even if the deposit is recorded to the customers account there is no way to link it to the invoice when the invoice is created. Ideally you want the invoice to show the net (of deposit) balance owing. Even better if that eliminates the need to manually match the deposit (cash receipt) with the invoice after posting.

Ideally there should be some way to manage unapplied cash so that it can be reported separately from other transactions and posted to a separate control account. Then when an invoice is created the Payment process should have an option to apply the unapplied payment. This would allow the invoice to be printed with a net of deposit balance owing and eliminate the need to match the payment to the invoice in a separate transaction.

Hi Doug

This is not going to take your breath away, but what I do is give the deposit's check number a prefix such as DEP (e.g. DEP-12345), and then use GridView or Crystal to create a custom Aged Receivable report which excludes the DEP transactions (the report can't be easily backdated).

If desired, I will create another GridView which lists only unapplied DEP transactions, and use the total to make a GL journal entry adjusting the AR and Customer Deposits accounts (automatically reversed next fiscal period). By doing this, the custom report total should tie to the AR account balance.

This doesn't solve the problem of having to match the deposit against the invoice - if the billing module is set up so that the invoice number is NOT automatically assigned, then often the person entering the cash will know what the future invoice number will be and can "apply" the deposit to that invoice number, so that subsequent matching is unnecessary.

Steve