Security Deposits - Customer & Supplier

Hello,

I am stuck with an issue here regarding the security deposit amount we collect from customers and also the security deposits we make to suppliers.

I have read through the guides and it suggests what i was already doing which is not suitable for me.

The situation is like we collect a security deposit amount from our customers and sometimes we have to make a security deposit to our suppliers. This security deposit does not have anything to do with the Accounts payable or Accounts receivable as this amount is not adjusted against the invoices made or received. It stays as a deposit as long as there is business with the customer or supplier. It will only be adjusted when the business is terminated.

I had created a sub-account named Deposits under Assets to receive and spend the deposit amount. But the problem i encounter is:

  1. The deposit amount do not show up in the customer or supplier statements under reports. The statement under reports should show the deposit amount as a separate account.

  2. There is no option to set the starting balance of a customer or supplier under a particular account, in my case “Deposits”.

Any help regarding this will be very helpful. TIA

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You are trying to have your cake and eat it, too. You say you do not want the deposits to show in Accounts receivable/payable. But you want them to show on statements. However, statements are records of the customer/supplier subaccount under Accounts receivable/payable.

I can think of several alternatives that might work for you:

  1. Create duplicate customers/suppliers, labeled for deposits. These new subaccounts will contribute to Accounts receivable/payable. But they will be separate from the regular accounts involving invoices and payments. And you could produce separate statements.

  2. Make Customer deposits a custom control account under Liabilities, made up of customers. (These are not assets, because you owe the money to the customers.) Make Supplier deposits a custom control account under Assets, made up of suppliers. (These are assets, because you are owed money.)

  3. Use special accounts.

My favorite would be #2, because you already have the customers and suppliers defined. But recognize that deposits entered that way will not appear on statements. Others may think of different approaches.

Suppose i choose to try this method I still have to create duplicate customers and suppliers. Because a customer or supplier can have only one control account which is default to Accounts receivable or Accounts payable.

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@Tut your #2 also requires your #1 - duplicate account.
Main account under “Accounts receivable/payable” and duplicate account under custom control account.

You are right. I forgot about needing to specify the control account for a customer/supplier. My apologies.

I guess the choice, then comes down to whether you want the deposit to show in a separate account or be part of Accounts receivable/payable. The first choice seems better from the Balance Sheet perspective. The second choice lets the deposit show on a statement.

I wonder why this is not a feature available in Manager. Most business take security deposits or whenever there is a need of investment to meet specific needs of customer or supplier. And in most cases this is not a single transaction which would further complicate things. In my opinion i think this should be included in a single statement which shows all transactions because that would bring clarity and assurance for the customer or supplier that the deposit is there. It would also help easily cross-check with the statement received from the supplier or customer than to have two statements.

It would have been really useful if there was an option to link multiple control accounts to customers and suppliers.

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You can put the deposits into a separate (duplicate) customer account which is also allocated to a Custom Control Account made up of customers located under BS Liabilities and still get statements as long as you select “transactions” as the statement type

Yes, and the accounting should recorded it as such, which is not as an accounts receivable transaction.

I think this is the only option possible at present.

I was hoping to be able to show both under the same statement of transactions for a customer or supplier. That way all the transactions would be dated and tracked easily.
Creating duplicate customer or supplier is ok. But its more tedious when we have to document everything as a hard copy. In our case we file the hard copies of quarterly statements for every record. Also our government rules states that we should maintain all records of atleast 6 financial years. so if we have to maintain two records for a single customer you can very well understand the difficulty when we need to cross-check any old transaction.

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  1. Why and 2) why not print as a pdf file and store on a USB stick. Then print a hard copy “if” ever required. As long as you can reproduce a hard copy, then maintaining an actual hard copy is excessive.

This is a requirement of most governments, though the number of years may vary.
As Manager is endless, even after ten years all records are still reproducible, this maintaining of records should never be an issue.

No I don’t understand, for either customer record just create and print a statement for the whole ten years if ever required, besides the “deposit” customer record would be fairly static.

USB’s stored off site is probably more reliable then paper being destroyed in the event of an office fire.

Manager is constantly evolving. So it is doubtful the document template we use today will be possible to reproduce in another two years. Moreover, our tax system is changing and I am sure there will be more changes. So nothing is a guarantee. :slightly_smiling_face:

What i tried to explain is that the monthly or quarterly statement of a supplier or customer is exchanged to verify whether the records match. And their transactions are dated which includes the credit, debit and deposits. So checking the transactions with two separate statements, one for credit debit and one for deposits, will cause a bit confusion with the balance.

Also, suppose i have duplicate customers or suppliers as you suggested, how will the available balance in Deposits be adjusted against the outstanding balance at the end of a business?

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A Custom Field for Customers named " Amount of Security Deposit" will show on Customer Statements.

Of course the information would have to be entered once for each customer, and it would appear as a footnote on the Customer Statement.

The amount would still have to be recorded on the balance sheet. A date or reference number could be included in the Custom Field to help locate the original balance sheet entry, which may have been recorded years before.

There does not seem to be any elegant solution to this.

Users who starting using Manager 4 years ago can still reproduce their first transactions today.
Because the template changes the data hasn’t, the data will be reproduced in accordance with the template of the day.

True but changes in tax systems doesn’t affect data - countries like Australia / New Zealand have gone from non GST to GST, but all those transactions prior to GST remain unaffected.

To accept your argument means that the 6 year requirement for recording keeping dissipates because the tax system has changed - but that is not the case.

But if one customer account only has deposit transactions where is the confusion.

Via a Journal entry - similar to the transfer of balances when you have both a Supplier / Customer relationship with the same business.

I suggest that you stop finding obstacles for obstacles which don’t exist. Businesses such as Real Estates in receiving rental bonds (security deposits) have been dealing with these types of situations for decades if not centuries and they aren’t having your difficulties.

We are collecting Security Deposits from our Customer & Employees which is refundable at the end of services.

We have mapped the process through Non-Inventory and checked ‘item can be sold’ through which we can raise the invoice and a Liability account was selected for accounting.

Today, it is noticed while review that ONLY Income & Expense accounts are appearing in a drop down list. We will appreciate your quick response with guideline to manage the situation.

Deposits should be handled by posting the receipt to a Customer’s subaccount in Accounts receivable or to a special account. See the Guides:
https://www.manager.io/guides/7093
https://www.manager.io/guides/10555

Non-inventory items are for things you buy or sell. You are doing neither when you accept a deposit.

Thank you for your response.

It is quoted that ‘the deposit also reduces the total Accounts receivable balance’ which should not be the case. Another option suggested to use Special Account which at-least supports for accounting.

The option was available till last week or so therefore we have designed our process. We tried to implement today for final testing and got stuck! May we know the reason why it is has been changed suddenly?

Following this guideline will only address accounting matter, we have to issue an invoice to Customer separately and through said guideline it is seems not possible.

Yes, it normally should, as money is fungible. If you want to prevent that, read this Guide: Avoid automatic credit allocations with special accounts | Manager.

I do not know. I am not involved with development. If account options were removed, I suspect that is because they should not have been there in the first place. It certainly would not make sense to post purchase or sale of non-inventory items to any accounts other than income or expense accounts.

You are not selling anything when you receive a security deposit, so you do not have to issue a sales invoice. Issue a receipt. But if you want to include the deposit on a sales invoice—knowing you will refund the amount later—post the line item to Accounts receivable or a special account.

Can you please check with development team, if it could have erroneously remove or if they can add the option back. We really need this option enable.

Beside, all your logic, we have to issue an instrument such as memo/invoice first which is ultimately paid in bank otherwise please let us know how we can issue a memo first.

If you need to issue something to obtain the deposit, use a sales quote. You can give it any title you want, and it has no financial impact. See Create sales quotes | Manager.

If you want a change to the program, you need to provide a use case that justifies it from an accounting viewpoint, something more than “we really need this option….”

I have just upgraded to the latest version (21.2.64) and as @Rajwani has stated it is no longer possible to select balance sheet accounts for Non-inventory items.

Existing Non-inventory items, that have a balance sheet account selected, remain intact and can be used as before in transactions.

I use Non-inventory items for most transactions and this change will affect the way I use Manager greatly.

I have checked the guide relating to Non-inventory items and it has been updated to reflect the recent change. I find that the four reasons given in the guide for the (optional) use of Non-Inventory items applies to any accounting item, not just products and services and this is why I use them extensively.

Also, custom fields created in Non-Inventory items enables the creation of more meaningful custom reports for all accounting items.

It would be interesting to know how many users are affected by this reduction in functionality.

It may be that the developer has made these changes to provide better functionality elsewhere in the program and it would be helpful to be informed if the change is permanent so that users can confidently move forward with other techniques to combat the loss of this functionality.