Advance Payment of Customer Orders

This article will show how to handle in Cin7 when a customer pays the order in advance.

Here are the steps to follow:

1. Upon creating the sales order, ensure that the Quote stage is active.

2. At the bottom of the screen, click on Customer Credit. The related Deposit Account for this setting can be found under the Account Mapping page of Cin7.
3. Select the bank account where the customer payment was received and enter the reference number, payment date and the amount. Click on Save.

4. Once the sync happens, you will see this record under the Customer Deposit account in Xero.
5. When you get to the Invoice stage, you will get a prompt that the customer has an unused credit in the system.

6. Click on Yes and select the payment initially recorded during the Quote stage by putting a tickmark before the date. Click on Add and Save.

7. When the customer's invoice syncs to Xero, it will already be marked as paid using the Customer Deposit account.
8. Lastly, in doing the bank reconciliation, record the payment received from the bank using the Customer Deposit account in order to offset the initial amount recognized during the Quote stage, because of the offset between the initial record and application of the deposit on the invoice, this account should always be zeroed out.

As a summary, this will be the entries involved when there is an advance payment from the customer:

CUSTOMER DEPOSIT ENTRIES (Customer pays in Advance)

Debit (increase) Bank

Credit (increase) Customer Deposit

Shipment of order to Customer

Debit (increase) Accounts Receivable

Credit (increase) Sales

Recognition of the Cost of Goods Sold on the Order

Debit (increase) Cost of Goods Sold

Credit (decrease) Inventory

Issuance of Invoice to the Customer

Debit (decrease) Customer Deposit

Credit (decrease) Accounts Receivable