Managing Deposit Invoices with QuickBooks

Create Deposit Invoices
1. Collect deposits at different stages of the project
2. All deposits are sent to your liability account in QuickBooks
Create the Final Invoice
1. One final invoice is created for the remaining balance
2. This invoice triggers full revenue recognition
Revenue Is Recognized
1. QuickBooks moves the total from liability → revenue
2. No manual adjustments required

Example

Contract: $10,000

Deposit 1: $5,000
Deposit 2: $3,000
Final Invoice: $2,000

Result:

$8,000 held as liability until completion
Final invoice recognizes full $10,000 as revenue

Change Orders and Deposits

How change orders behave depends on when they are made in relation to the final invoice.

Before the Final Invoice

If a change order is created before the final invoice:

Deposit invoices automatically adjust to the updated contract
Remaining balances are recalculated
You can proceed with invoicing as normal

👉 No special action is required

After the Final Invoice (Not Yet Synced)

If you are using “Skip Final Invoice Until Job Complete” and the final invoice has been created but not yet synced to QuickBooks:

You can still update or delete the final invoice
Then recreate it to reflect the updated contract

👉 This gives you a window to make adjustments before revenue is finalized

After the Final Invoice Has Synced

If the final invoice has already synced to QuickBooks:

Existing invoices will not automatically update
You will need to:
- Adjust invoices manually in QuickBooks, or
- Create a journal entry

👉 Builder Prime cannot modify transactions that are already recorded in QuickBooks

When Deposits Equal 100% of the Contract

If a change order reduces the contract value and your existing deposits now total 100%:

A final invoice cannot be created

You have two options:

Convert the most recent deposit invoice into a final invoice, or
Record the adjustment manually in QuickBooks

Best Practices

Finalize all change orders before creating the final invoice
If using deferred revenue, consider enabling:
- “Skip Final Invoice Until Job Complete”
  This gives you more flexibility to make adjustments before revenue is recognized

Key Rules to Know

Deposit totals must stay below 100% of the contract
Only one final invoice is allowed in the deferred workflow
The final invoice must bring the total to 100% of the contract
Deposit invoices cannot be edited after the final invoice is created
Revenue tracking does not include tax

Choosing the Right Workflow

Use Standard Workflow if you:

Want revenue recognized throughout the project
Use progress invoicing

Use Deferred Revenue if you:

Collect multiple deposits
Want cleaner, end-of-project revenue recognition

Setup

These options can be configured in your QuickBooks Integration Settings → Accounting tab:

Set Default Deposit Accounting Code (will sync deposits to your designated liability account)
Defer Revenue to Final Invoice (enables multi-deposit workflow)
Skip Final Invoice Until Job Complete (optional timing control)

Note:

These settings apply to QuickBooks Online only
Workflow must be selected before creating the first invoice on a project

The default accounting code for deposits is set within the Accounting configuration page.

The deposit invoice would indicate the amount against the liability account. The subsequent invoice(s) would enter a negative amount against the liability item and add the same amount to the receivables item.

Frequently Asked Questions

Q: Can I still use the old single-deposit workflow? Yes. If you leave "Defer Revenue to Final Invoice" unchecked (or disable it on a specific project), the system behaves the same as before with the single deposit invoice and progressive revenue recognition.

Q: What if I don't use deposit invoices at all? That's fine. This feature does not force you to use deposit invoices. If you don't mark any invoices as deposits, your invoices will sync to QuickBooks as normal revenue transactions.

Q: Does this apply if I'm not connected to QuickBooks Online? No. These workflow settings only apply to QuickBooks Online-connected accounts. Revenue recognition is handled in QuickBooks, not within Builder Prime. If you are not integrated with QuickBooks Online, these settings have no effect.

Q: Does this work with QuickBooks Desktop? No. This feature is available for QuickBooks Online integrations only.

Q: Can I switch a project from "Defer Revenue to Final Invoice" to the Standard Workflow after I've started invoicing? No. Once the first invoice is created on a project, the invoicing workflow is locked for that project. Choose your workflow before creating the first invoice.

Q: Why does the recognized revenue amount not match my invoice total? Revenue recognition amounts do not include tax. Only the line item amounts before tax are used in liability and revenue calculations. The tax amount is handled separately and is not part of the revenue recognition figures.

Q: What if a change order makes my deposits equal 100% of the contract? You can convert the latest deposit invoice to a non-deposit invoice, which will trigger revenue recognition. Alternatively, you can create a journal entry in QuickBooks to manually recognize the revenue.

Q: What happens if I need to issue a refund after the project is complete? Refunds are handled as separate transactions (e.g., a refund receipt in QuickBooks) and will directly impact the revenue account. They do not affect the deposit or liability accounts.

Q: Who can change these settings? Both the QuickBooks Accounting tab settings and the project-level workflow setting require the Admin role and Company Setup permission.

Q: How does the project know which settings to use? When you create a project and select a class, Builder Prime pulls the default settings from the QuickBooks connection linked to that class. The "Defer Revenue to Final Invoice" setting is then stamped on the project and can be changed before the first invoice is created.

Here is an article that talks about how this would work with QuickBooks Online: https://quickbooks.intuit.com/learn-support/en-us/help-article/service-items/record-retainer-deposit/L6B5RsY6l_US_en_US

Here is an article that talks about how this would work with QuickBooks Desktop: https://www.gentlefrog.com/how-to-enter-customer-deposits-in-quickbooks-desktop/

Managing Deposit Invoices with QuickBooks

Contents

🆕 What’s New (QuickBooks Online ONLY)

Your Two Invoicing Options

1. Standard Workflow (Original Behavior)

2. Defer Revenue to Final Invoice (New + QuickBooks Online ONLY)

How the Deferred Revenue Workflow Works