What is a deposit in ERPAG?
The deposit in ERPAG is the amount of money that our customer has on our bank account. Or the amount of money we have in our supplier’s bank account. This money will be used in the future to regulate our obligations (Invoice/Supplier Invoice).
There are two types of deposits:
- Received deposit from a customer – Customer’s liability to us
- Given deposit to a supplier – Our liability to the supplier
In order not to repeat myself, in this blog we will explain received deposit from a customer. The same principle applies with the Given deposit to a supplier.
In ERPAG, you can evident the customer deposit in 2 ways:
- With a direct payment to (or from) a bank account;
- Refund by a customer return (or return to a supplier), or by voiding the document.
In ERPAG, we have an option which will distribute the deposit on the unpaid Invoices (or Supplier invoices) automatically.
Note: Deposit and advance payment are two different options. Even tho they look quite the same on the first glance. Advance payment is paying in advance for a particular Sales Order (or a Purchase Oder). It’s a specific payment for a specific order. While with giving the deposit (or receiving a deposit from a customer), we don’t know the specific order the amount will be applied to.
Registering deposit payment directly to a bank account
The first way of recording a deposit is when a customer makes a payment directly to our bank account. We evident that by activating the “Deposit” option of a “Payment” in a particular customer.
When the option opens, we are entering the deposit amount to a wanted bank account. If we want to follow the reference number of the transaction, we can add it here.
We can see the amounts of deposits, and other balances, in the “Accounts” section.
If we click on the account number, we can see the detailed info. That’s when we get the report from the “accounting” part of ERPAG.
Automatic distribution of deposit to a created invoice
The amount on the document is $700.00 and our deposit is $1,000.00. When we invoice the sales order, it will get a status “paid”.
Now we will create another Sales Order (with amount of $600.00), and invoice it.
Automatic distribution of deposit with a new deposit registration
Now, in our customer example, we no longer have the deposit amount. Now the customer owes us.
If a customer deposits the $300.00 again, the amount will be automatically distributed to unpaid Sales Orders.
And our Sales Order will be paid again!
Note: If there is more than one unpaid Sales Order, the deposit is distributed according to the Invoice date.
Deposit from Customer Return (Void)
We will now create and Invoice another Sales Order (amount will be $100.00).
And we will do a customer return on the previous Sales Order (with $600.00 amount).
Since our Invoice was paid, we will get a “refund” option. We will use this option to return the money to our customer, or add it to the deposit. If we add it to the deposit, we will use it for the current or future Invoices.
We will add this amount to the deposit. After that, the overpaid amount will be transferred to the deposit account, and distributed to open orders.
The document “Customer return” will have a negative deposit amount (-$600.00).
The Sales Order (SO-000005) will be marked as paid (the deposit amount is $100.00).
The remaining amount of $500.00 will be on our customer’s deposit account.
Note: The same steps apply when we void the document.
In business practice, sometimes it happens that we have to return the received deposit amount. We do that through the same option, receiving deposit, but with a negative amount.
Note: With deposit return, the reference number will be automatically populated. In case we have open references.
Internal accounting system in ERPAG
ERPAG has an internal accounting system. Its main role is to provide adequate transaction information.
Each document that has an accounting transaction, has a “journal voucher” button.
The option shows transactions directly linked to the chosen document.
In our example, we can see closing the customer’s liability from the previously received deposit.
Like we already mentioned, the details can be seen by clicking on the account section in the customer. Or through the “financial ledger” in the accounting.
Note: For official accounting we advise that you use our integration with Quickbooks Online or Xero.
Check out our blogs for more information:
Deposits in a different currency
Each customer has a currency, based on which we do the calculation. So, when we register a received deposit in a different currency, we have the amount in our local currency as well.
In our example, we will register the deposit amount of €50.00. The exchange rate is 0.925. Which means that his is actually $54.05.
After this, we will create a Sales Order for €50.00. But, we will change the exchange rate to be 0.850. Which is actually $58.82.
When we invoice the Sales Order, it will be “Paid”.
The currency difference of $4.77, will automatically account to “Exchange Losses”. Invoice: $58.82 – Deposit: $54.05 = $4.77.
The currency change was negative. That’s why we have an additional expense. If the currency change was positive, we would have “Exchange gain”. It would be our additional revenue.
Deposits and Advance payment
We already mentioned the difference between a deposit and advance payment. By the business rules, the payment obligation occurs after the sales order is invoiced. In reality, the “business starts'” only after the issued payment. Completely or partially.
ERPAG users asked for the ability to convert the deposit into “advance payment”.
A Sales Order (entered or approved), with a customer deposit, will give you an option to choose whether you want to “use the deposit as advance payment”. With this option, you are converting a deposit, into “advance payment”.