Supplier deposits and advances are funds paid by a business to a supplier before they have been earned. While the funds may be in the supplier’s hands, they are actually being held in trust for the business that pays the deposit and represent a liability the supplier must eventually either repay or convert to income by completion of the economic activity for which they are intended. Some examples include:
Two essential facts must be recorded for every deposit:
In Manager, both facts are recorded simultaneously when the deposit or advance is paid out. To record payment of a deposit, go to the Payments tab. Select New Payment:
Complete the payment form as you would for any other payment:
Contacttype as Supplier. Choose the supplier from the dropdown menu. (The supplier to whom you are making the deposit must already by defined.)
Itemfield, even if the deposit is for an inventory or non-inventory item.
Account, select Accounts payable. The supplier’s subaccount will automatically be selected to match the supplier designated under
Payee. This choice cannot be edited. (See note below.)
If the deposit is paid to someone other than the supplier for whom the deposit is intended, the
Contact type above must be Other. Then, you will be able to choose any supplier’s subaccount under Accounts payable.
Qtyfield, because no inventory items or billable items are involved with a deposit. You may simply enter the total deposit in the
Unit pricefield. However, if you wish, enter the quantity and unit price and Manager will calculate a total.
Tax codeis normally left blank, because deposits or advances are not usually taxable events. However, rules in your jurisdiction may differ, especially if the deposit is for specific goods or services that will be delivered later. Check with a local accountant or your tax authority to be sure.
Deposits, even those involving calculations with quantities and unit prices, have no impact on inventory values or quantities because no inventory item is designated.
The payment will now be deducted from the applicable bank or cash account’s balance:
The deposit also reduces the total Accounts payable balance, though the impact of a specific deposit will probably be obscured on the Balance Sheet by deposits and payables to other suppliers. To view specific information about supplier deposits, you can drill down by clicking the Accounts payable balance on the Summary page and locating the supplier’s account
Clicking on the balance, you can see transactions contributing to it, including the recent deposit payment:
You can do the same thing in the Suppliers tab, with similar results.
Whenever a purchase invoice is created for a supplier, any available net debit in that supplier’s Accounts payable balance will be automatically applied, reducing the balance due on the new purchase invoice.
Deposits and advances cannot be applied on purchases recorded only via cash payments. Such transactions are not processed through Accounts payable, so Manager cannot apply any available balance. If you purchase from a supplier on a cash-and-carry basis, but wish to apply an existing deposit or advance, you must create a purchase invoice and make payment against it in separate transactions.