Managing Retainers in QBO

This article covers recording a retainer or deposit in QuickBooks Online.

Shanna JM avatar
Written by Shanna JM
Updated over a week ago

You have the option to create retainer requests and submit them to your clients for payments. You can also apply a credit to a retainer, which you can in turn use against a future invoice for that client.

If you have integrated your QBO account with DesignFiles, you also have the option to sync retainers as well as invoices.

However, Retainers are treated as a liability in QBO because... although your business is holding the money from a credit or retainer, it technically isn't handed over to you until it's used to pay for a product or service.
Therefore, when you invoice the customer and this invoice is now paid from the retainer, this is when that liability will become an income. This process is however not automated.
You will notice that when you apply a payment to an invoice in DF, the retainer in QBO is not automatically reduced.

Here are the steps for handling synced Retainers in QBO

Step 1. Create a retainer item

  1. Select Settings ⚙, then select Products and services.

  2. Select New.

  3. From the Product/Service information panel, select Service.

  4. Enter a name for the new product or service item (Example: Retainer [Client name]).

  5. From the Income account ▼ dropdown menu, select DesignFiles Liability Suspense Account.

  6. Select Save and close.

Step 2. Locate and Edit the Paid Invoice in QBO

While you have already done the necessary steps in DF, QBO still requires some manual adjustments. You will notice that the synced retainer in the chart of accounts has not been reduced.

  1. Locate the associate invoice in QBO and select Edit (The invoice would have already said) "Paid".

  2. On the last line of the invoice, in the Product/Service field, select the Retainer item you made in Step 1.

  3. Enter the paid amount as a negative to subtract it from the invoice.

  4. Select Save and close.

This decreases the amount in your liability account and applies the credit to your customer's invoice, turning it into income. The money is now yours.

You will now notice that the retainer in your chart of accounts has been reduced by the amount paid. Your invoice will now show a status of "Depoited" with a zero amount.


Transfer funds from your trust liability account to your operating account

If you created a separate trust liability bank account to hold retainers or deposits, once you have turned the retainer into income, you can transfer that money to your operating bank account.

  1. Select + New.

  2. Select Transfer.

  3. From the Transfer Funds From ▼ dropdown menu, select your trust liability bank account.

  4. From the Transfer Funds To ▼ dropdown menu, select your operating bank account from the dropdown list.

  5. Enter the amount that you just received as payment for the invoice.

  6. Select Save and close.

The money is recorded as having moved from the special trust account to your business' operating account.

Track deposits or retainers by customer

You can track how much of a retainer or deposit you are holding for each customer from the Balance Sheet report.

To review retainers or deposits by customer on the Balance Sheet report:

  1. Go to Business overview, select Reports (Take me there), then select Balance Sheet.

  2. From the Report period ▼ dropdown menu, select All Dates. Then Run report.

  3. In your liabilities section, locate your trust liability account.

  4. Select the amount shown for the account to open the Transaction Report for that account.

  5. Select Customize.

  6. Once on the Customize report panel, select Rows/Columns.

  7. From the Group by ▼ dropdown menu, select Customer.

  8. Select Run report.

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