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Advance Payments

  • Fellow
  • 29 posts
  • # 117689

Hi Guys

Can you help me with something.

The company I work for take deposits in advance for the supply of spare parts for electrical products. The cash is allocated to a holding account in our accounts and then when the goods are supplied an invoice is raised against the account so the sale is recorded in the income statament. 

However I have a customer who has placed a number of large orders- over £30k in total for spare parts. The vast majority of these parts have been purchased and supplied to the customer but some are on back order with no estimated delivery time. It is approaching our half year and I want to try and recognise the sales in our accounts as we have earned most of the revenue but it has not been invoiced.

Does anyone have any idea how this can be recognised in the accounts without invoicing? Especially the amounts involved will make a material difference to the half yearly figures.

Any suggestions greatly received.



  • Associate
  • 4 posts
  • # 117694

Hi John

There couple of things you need to consider according my understanding

1. Is your accounting books setup on cash accounting or accruals basis, more likely accrual basis 

2. Deposite taken, should be sitting in deposite account in your book so when customer'r order item purchased and delivered then I assum your businees policy will asking customer pay the out standing amount of the oder and disptch the oder. if these the case the you raise invoice for total amount of order, take the part payment from customer and same time your credit your deposite account to settle the invoice

3. if it is accrual basis then off course you hold the deposite and raise invoice to customer for outsatnding, at the point you can not settle raised invoice until you recieve the rest of out amount and wait until cutomer pay then settle account

4. if customer requested goods been ordered and some of them left over to dispatch becuase you have not recived it, then you need consider payment recieved from customer. if money paid then complete the order but mark on delivery note and on invoice for outstanding goods to dispatched once its arrived but complete the sale so at least you sales ledger complete but only issue of the stock where you need make a note about the goods outsatnding

well these is my understanding but you may hear somthing different from other colleuge. wish you all the best


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