Input Needed - Prepayment for project

We are a specialty contractor for home audio, video, and automation.  I’d think our workflow would be similar to electricians, plumbers, fireplace, garage door, etc.
We present a quote and when it is accepted, we request a deposit to seal the deal.
We have created a sales order type IN for invoice that is a temporary document.
We can send via email the payment link with this sales order and once the payment is received, we delete the sales order.  This is a workaround to get the money on account.
The order is converted to a project, then service order(s), then appointments.  Deposit is applied to invoices from project.
Hope this helps.

Hi there,

1. Could you please share with me how do you need to recognize the taxes for AR deposit on project? and when do you need recognize taxes? What is your setup for taxes for deposit on project? → we dont record tax for deposit
2. Could you please describe your business case when you need deposit on project? → it depends on payment term with Customer or Vendor. These entity will require to have a deposit before shipping
3. How do you request deposit for project?
4. How do you process deposit got for project?
   • Record deposit from Customer: Create an Prepayment on AR302000. When issue Invoice to customer, applying that Invoice to Prepayment
   • Record deposit to Vendor: Create an Prepayment on AP302000. When record Bill from Vendor, applying that Bill to Prepayment
5. What is important for you when you work with prepayments on project?
   • Prepayment should show on Project Balance then we can have a cashflow of that project correctly
     • AR Prepayment is Asset
     • AP Prepayment is Liability

 Hope this helps!

Yên Chi

1. Could you please share with me how do you need to recognize the taxes for AR deposit on project? and when do you need recognize taxes? What is your setup for taxes for deposit on project? I have not seen many users need to collect taxes on deposits.
    
2. Could you please describe your business case when you need deposit on project? There are many but essentially some users need the ability to collect a deposit before work can start.
    
3. How do you request deposit for project?
   Would be nice to have a Payments tab in the project that a payment/prepayment can be created similar to how its done on a sales order.
4. How do you process deposit got for project?
   Once a Prepayment is associated to a project it should behave the same way it does on a sales order and be applied to any invoices created until it is fully applied.
5. What is important for you when you work with prepayments on project?
   Currently Payments/Prepayments do not have fields for Project/Project Task in the header or detail lines, adding that will provide for a better way of handling deposits and or tracking payment details to a project. This also opens up more ways to manage Revenue Recognition to a project without having to get creative with allocation rules and or multiple account groups.

One addition to my previous post would be the ability to have a payment created from an opportunity or project quote and that payment flow over to the project

1. Could you please share with me how do you need to recognize the taxes for AR deposit on project? and when do you need recognize taxes? What is your setup for taxes for deposit on project? We create an AR invoice for the customer to pay it and recognize the taxes at the time of the invoice.
2. Could you please describe your business case when you need deposit on project? At the beginning of the projet and also, depending on the contract, it can be multiple times during the projet. 
3. How do you request deposit for project? Sending an invoice.
4. How do you process deposit got for project?  The payment is applied to the invoice but it’s the invoice that has been adding a deposit amount into a liability account group into the projet. The allocation rule is reducing the pro forma invoice amount of the amount of the deposit.
5. What is important for you when you work with prepayments on project? To get the right balance and be able to deduct from the pro forma invoice amounts.

​@Irina Kateneva 

I have a client with  Revenue Budget line called "Deposit" that goes to balance sheet - they bill like this:

1. Bill this line at 100% on the first Pro Forma Invoice.
2. Taxes are  recognized at the time the AR Invoice is generated
3. Use deferred revenue to amortize it based on deferred code

If Deferred is not in play or possible, another option to manually debit deposit / credit Revenue as work starts and project is ready to recognize the revenue, some variations of it like COGS for % complete. with this process the Account Group/GL Account for that specific line is mapped to a Liability (Deferred Revenue/Customer Deposits) instead of Sales, releasing the AR Invoice Debits AR and Credits Liability. It keeps unearned revenue off the P&L.

Tax should be collected when actual work begins. 

Ideally introduce a 2 layer proforma document in Acumatica that handles the initial deposit billing before any work begins. This proforma acts as a draft invoice tied to the project, allowing the contractor to request and collect a deposit from the client in a controlled way without immediately impacting the general ledger or triggering formal billing.

Once the deposit is received it is recorded as an AR payment against a contract liability account and associated with the project. It is not recognized as revenue at this stage. The proforma simply provides the structure to request and track the deposit while keeping the accounting clean.

When actual work begins and the first AIA billing cycle is ready, the proforma is converted into layer 2 the actual/formal progress billing document using Acumatica's native AIA billing functionality. At that point the deposit can be properly applied against the invoice, revenue is recognized appropriately, and all postings flow through the standard financial engine without any workarounds.