How to handle Prepayments in Quickbooks Online (QBO)

What is a Prepayment?

Prepayments occur when a customer has paid an invoice before it has been synced. Alternatively, you are able to take a prepayment on a customer's behalf via Wise-Pay or via a Quicklink/Virtual Terminal.

When a customer pays before you sync, the amount will be received as a prepayment as the invoice does not yet exist in your QBO. The same goes for prepayments you take on a payers behalf - the money received is in lieu of an invoice.
Once the invoice is synced, you can easily allocate the prepayment funds to the Invoice. 

How do I handle Prepayments?

When a prepayment is made, the following happens:

  • A QBO Credit Memo will be created in Wise-Pay and in QBO for the payment received from your customer.
  • A Prepayment Invoice is created in QBO. 
  • Both invoices are created with the reference 'PF'.
  • Once the Invoice is created in your PSA and then synced to QBO, you need to manually apply the credit to the invoice. This needs to be done in your Accounting Package.
    • Prepayment Credit Memo (prefix PF_CR'):
    • Select the Invoice to apply the credit to:
    • The credit note and invoice are matched off, and the payment is allocated against the Prepayment Invoice:  
  • Once you have applied the credit to the invoice in QBO manually run a Payment Sync in Wise-Sync to update the payment status in Manage

Wise-Pay Prepayment Settings

In your Wise-Pay Merchant Configuration, you need to set the following:

  • Account for Clearing Payments: Wise-Pay Clearing Account
  • Overpayment Tax Code: The 0% (i.e. 'BAS excluded' / 'No Tax' / 'Tax Exempt') tax code from QBO

Important Note:

  • Remember to sync frequently, as this will help create less Prepayments.
  • For ConnectWise Partners, when you enable our new Real-Time Sync feature, invoices will always be synced as soon as they are closed, thus avoiding your customers paying an invoice before it's synced!
  • For our Autotask Partners or ConnectWise Partners who have not yet enabled Real-Time Sync, emailing invoices to your customers after you sync them would be considered best practice.

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