Deposits: money in, goods not out yet
A customer ordered goods and paid half up front. The money is in the drawer, but the goods are still yours. Here is the question that trips up a lot of bookkeeping: what do you record that money as? Call it revenue and you have declared profit on something you never delivered. Raise an invoice and you have reduced stock and put a receivable on a customer who owes you nothing. The correct answer: a deposit is an obligation you carry until you deliver.
The idea in a minute
That is the commercial number your salesperson discusses with the customer. Your books see the same money differently: an advance held to the customer's credit, not revenue — until the goods are delivered.
How it works
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1. The sales order: an agreement, not an invoice
You record the order with its items, prices and requested delivery date. Prices are frozen from that moment, so however prices move later the customer gets what was agreed. Quantities are reserved, tying them to this order. Up to here there is no accounting entry and no stock movement — because no sale has happened.
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2. Taking the deposit
You record the payment against the order itself: the amount, which cash box or bank account it went into, and how it was paid — cash, card, transfer, wallet or cheque. The money enters your treasury immediately and shows in your balances. And you can take more than one payment against the same order.
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3. That money is not your revenue
Zemam records the deposit as an advance held to the customer's credit — an obligation, not revenue. This is not accounting pedantry: if the customer walks away, that money goes back to them. Booking it as revenue means your income statement claims profit you may hand back tomorrow, and your tax is computed on a sale that never happened.
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4. The order's position is clear at any moment
On the order you see the total, what has been collected and what remains, with every payment listed by its number, date and method. So when the customer rings and asks “how much have I paid and what is left?”, the answer is on screen — not in a salesperson's notebook or somebody's memory.
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5. Delivery: the invoice and the deposit settle themselves
On delivery day you fulfil the order, and Zemam raises the invoice from it at the frozen prices, releases the reservation, deducts the stock and recognises the revenue — then applies the advances to that invoice automatically. So the balance owed comes out right without anyone matching receipts to invoices by hand.
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6. Full delivery only — and protected
Zemam will not fulfil an order until every item on it is fully available, and it names the short item and quantity when it is not. That is a deliberate decision: part-deliveries create half-open orders that are hard to chase. And an order cannot be invoiced twice — if an invoice is already linked to it, a second fulfilment is refused.
In short
The deposit hits your treasury immediately, but is recorded as an obligation, not revenue.
Total, collected and remaining on the order — a ready answer for any customer who asks.
Revenue and the receivable are recognised on delivery day only, not on payment day.
On delivery the payments are applied to the invoice automatically — no manual matching.
Why this actually matters
Your profit tells the truth
If deposits are booked as revenue, a month full of orders looks excellent even if you delivered nothing. The following month looks weak while you deliver all of it. The real problem is that you make decisions on numbers that are not true.
Tax follows the sale, not the booking
The tax invoice is issued at delivery, with the actual sale. Recording a deposit as a sale means declaring tax on a transaction that has not happened.
Open orders = future work
Orders paid for but not delivered are both obligations and pipeline. Gathered in one place, they let you plan purchasing and production instead of being surprised.
Fewer customer disputes
Every payment carries a number, a date and a method recorded on the order. The “I paid” / “no you didn't” argument ends at a single record everyone can see.
Related reading
Taking deposits and losing track of them?
Talk to us and we'll walk you through the whole cycle — deposit, reservation, delivery, and an invoice that settles itself.