Sales prepayment for next financial year

How do we enter a sales prepayment for the next financial year, understanding that the amount paid goes into bank account immediately its paid to us,

You can create a liability account called Prepayments and then categorize this prepayment amount received to this account. This way the amount won’t show as an income, it will show as a liability.

When prepayment amount is then used for making a sale, then you can do a journal entry to debit prepayment and credit sales.

Thanks thats brill, and whats more brill, l is the fact you have responded in laymens terms the novice bookkeeper like me can understand clearly…Thank you.

You can also post the payment to Customer credits, which has the advantage of associating it with a specific customer (which must be created first). Then, when you do the work, it will be automatically applied to sales invoices.

@lubos, I may not be thinking this through correctly. But I wonder if the advance payment or deposit situation could be simplified by allowing Customer credits account to be selected when a sales invoice is created. You can already receive money directly to customer credits. But you currently must allocate an advance payment on a sales invoice to some type of prepaid income account (a liability account). When you receive payment against the sales invoice, the account receivable is cleared, leaving the balance in the prepaid income account. While that is financially correct, it prevents Manager from associating the liability with the specific customer. Subsequent invoices, at the time the revenue is actually accrued, do not automatically apply what is really a customer credit. Only if you transfer it to Customer credits by journal entry can you take advantage of the built-in credit application feature.

If you could allocate directly to Customer credits on the sales invoice, the account receivable would be balanced by the customer credit, so there would be no net change in financial position or performance. Receipt of payment against the invoice should, I believe, automatically allocate the payment to Customer credits. Stray deposits would be avoided and a journal entry would be eliminated.

I am curious what you think.

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Hi again lubos, help me out again here will you. your last help is perfect solution, however, how do I enter prepayments from previous year.

Unless I misunderstand your question, all you have to do is date the transaction when it happened. However, the date must be after your start date or Manager will ignore it.

If the deposit was paid before you started using Manager, edit the customer by checking the tick box on that customer’s page and entering their credit balance as of your start date.

This Guide may also be useful: Manager Cloud.