Getting Started
The first step is to run the A/R & Deposit Summary report for the current fiscal month. While the report can be generated for prior periods, doing so may not accurately reflect your current balances.
This report provides a snapshot of:
Total Deposit Available
Retainer Available
Open A/R (Accounts Receivable)
All values are shown at the project level.
Understanding the Report
Before making any adjustments, it’s important to understand what each column represents:
Deposit Available
The total deposit currently held on proposals within a project.
Example: Project KNE01 shows $3,980.03 in available deposits across its proposals.
Retainer Available
The remaining retainer balance for the project. Unlike deposits, retainers are not tied to proposals and are tracked separately.
Total Deposit & Retainer
The combined total of deposits and retainer.
Example: Project WAR01 has -$3,980.00 in deposits and -$2,500.00 in retainer, totaling -$6,480.00.
Open A/R
The total balance of posted invoices for the project. While separate from deposits, available deposits or retainers can be applied toward outstanding invoices.
Example: Project SAN01 has $2,978.97 in A/R, which could be reduced using its $1,000 retainer balance.
Cleanup Options
Once you understand the report, the next step is deciding how you want to resolve the balances. There are three common approaches:
Option 1: Create Invoices
Invoice items that are currently holding deposits.
Option 2: Remove Deposits via Cash Receipts
Reclassify deposits out of the project and into another account.
Option 3: Refund the Client
Return the remaining balance directly to the client.
Option 1: Creating Invoices
This is often the preferred approach because it keeps funds within the project and provides a clear audit trail.
Steps:
Run the Deposit Analysis report for the project.
Review the “Deposits Available by Line Item” section (typically at the end of the report).
Identify items holding deposits and create invoices for those items.
Once invoiced, the deposit will automatically apply and reduce the invoice balance.
Invoice Approaches:
Invoice the full amount and collect any remaining balance.
Adjust pricing so the invoice total minus the deposit equals $0 due.
Set the invoice amount to $0, allowing the deposit to convert into a credit on account.
For information on overriding the invoice price, please see the article here.
For clarification on these 3 approaches for this option, please see the video below:
Option 2: Removing Deposits Using Cash Receipts
This approach removes deposits from the project and reclassifies them to another account (often revenue, but confirm with your CPA).
Steps:
Run the Deposit Analysis report to determine:
Total deposits and retainer balances
Which proposals hold the deposits
Record the first cash receipt (to remove funds from the project):
Enter the project code
Input the total amount as a negative value
Use the appropriate date and payment type (you’ll reuse these)
Add a clear note in the Check No. field
Apply negative "This payment" amounts to:
Relevant retainer balance
Relevant proposal deposits
Post the transaction once the difference equals $0.
Second Cash Receipt (Reclassification Entry):
Select Add Miscellaneous Cash Receipt
Enter:
The same date and payment type as the first entry
A descriptive check/reference note
The positive amount removed from the project
The appropriate offset account
This step ensures your cash account remains accurate while properly reclassifying the funds.
Option 3: Refunding the Client
If the deposits should not be retained or reclassified, you can issue a refund to the client.
Refer to the Client Returns and Credits article here for detailed instructions.
Additional Information:
In some situations, a project may display a negative client deposit or retainer balance. This is uncommon and is typically an indication that another transaction or workflow issue has occurred. Whenever possible, you should investigate the cause of the negative balance before correcting it.
If the project is complete and you simply need to clear the negative deposit balance, there are two options:
1. Collect the Outstanding Balance from the Client
If the client still owes the funds, you can send a Retainer Request.
To do this:
Open the project.
Select the Deposits tab.
Click Retainer Request Email.
This will generate an email requesting payment from the client. Enter the client's email address, the amount being requested, and any additional notes before sending.
2. Write Off the Balance as a Loss
If you do not intend to collect the outstanding balance, you can write it off by injecting funds into the project.
This process requires two cash receipts:
A Project Cash Receipt to add the funds to the project and eliminate the negative deposit balance.
A Negative Miscellaneous Cash Receipt to offset the injected funds by reducing revenue (or another account determined by the CPA).
This is the reverse of the process described earlier in this article for removing positive client deposits using cash receipts. For detailed instructions, refer to that section of this article.
Need Help?
If you have any questions or run into issues, please contact Support@DesignManager.com for assistance.