How to pay a sales invoice using money from unearned revenue?


So I receive a lump sum payment from my client at the commencement of the project and as each stage of project is completed, I send an invoice to the client they approve payment and the money then comes out of the upfront payments.

  1. When I received the lump sum payment I put this into an unearned revenue account under liabilities

  2. When a stage of project is completed I send client his invoice by entering a sales invoice

  3. Now I need to move the amount from unearned revenue account to pay the invoice.

How do I do this?

  1. If I go into the invoice and click on “receive money”…the only option to choose from is bank account

  2. If I do a journal from unearned DR to Account Receivable …the sales invoice still remains open and unpaid + no record into the income figure


If you receive money from customer BEFORE issuing invoice, don’t allocate it to Unearned revenue account.

Use Customer credits account which is also a liability account.

Customer credits is a special account in Manager which will keep track of advance payments. When you issue an invoice to customer, Manager will automatically match customer credit with the invoice.

The journal entry method will work too but you might be doing something wrong? Did you select sales invoice after selecting Accounts receivable account? Also make sure you debit unearned revenue and credit accounts receivable. Not the other way around.