# How to Take a Customer Prepayment or Deposit on a Sales Order in QuickBooks Desktop

> Take a customer deposit on a sales order in QuickBooks Desktop with Enterprise Customer Prepayments, or with a deposit item and a liability account.

- URL: https://logistify.ai/guides/quickbooks-desktop/customer-prepayments-sales-orders/
- Section: QuickBooks Desktop Guides, Sales orders & pricing
- Applies to: QuickBooks Desktop Enterprise, Premier
- Steps checked against: Intuit's QuickBooks Desktop help articles, updated August and October 2026
- Updated: 2026-10-20

**Short answer:** To take a customer prepayment or deposit on a sales order in QuickBooks Desktop Enterprise 24.0 or later, open the order and select Receive Payments > Prepayment on Sales Order. Turn Prepayments on first at Edit > Preferences > Payments > Company Preferences. QuickBooks offers to apply it when you invoice. In Premier, record the deposit on a sales receipt with an upfront deposit item tied to a liability account.

## Before you start

- Sales orders are only in QuickBooks Desktop Premier and Enterprise. Turn them on with Enable Sales Order at Edit > Preferences > Sales & Customers > Company Preferences.
- Customer Prepayments need QuickBooks Desktop Enterprise 24.0 or later. They work only with sales orders and estimates, including progress estimates.
- Prepayments don't work with multicurrency. Intuit says turning multicurrency on turns Prepayments off.
- Both routes hold the deposit in a current liability account until you invoice. Intuit treats deposits as liabilities, not income. Ask your accountant which liability account to use.

## Pick your route

| Route | Editions | Where the deposit is recorded | How it reaches the invoice |
| --- | --- | --- | --- |
| Customer Prepayments | Enterprise 24.0 or later, with multicurrency off | On the sales order or estimate, in a current liability account you choose | QuickBooks asks whether to apply it when you save the invoice |
| Upfront deposit item | QuickBooks Desktop, with no edition limit in Intuit's article | On a sales receipt, using an item linked to a liability account | You add the deposit item to the invoice, or apply it as a credit memo |

*From Intuit's QuickBooks Desktop help articles, updated August 2026.*

## Step 1 (Enterprise): Turn on Customer Prepayments

1. Go to Edit > Preferences.
2. Select Payments, then the Company Preferences tab.
3. Under Prepayments, select Prepayment Settings.
4. Select Turn On Prepayments.
5. In Current Liability account, choose the account for prepayments, or create a new one.
6. Select OK, then OK again to close Preferences.

QuickBooks uses an internal Account for Prepayment Transfer to move the money from the liability account to Accounts Receivable. You can't change that account. You also can't pick a sales tax liability account for prepayments.

## Step 2 (Enterprise): Receive the prepayment on the sales order

1. Create and save the sales order, or open an existing one.
2. Select Receive Payments, then Prepayment on Sales Order. For a quote, open the estimate and choose Prepayment on Estimate.
3. Enter the amount and the other payment details.
4. Select Save and Close. The amount now shows as PREPAYMENT APPLIED on the sales order.

You can also start from Receive Payments on the Home page or in the Customer Center. Choose Prepayment on Sales Order, then select the sales order or orders the money is for.

### Show the prepayment on the printed sales order

1. Open the sales order and select Formatting.
2. Select Customize Data Layout, then Footer.
3. Check Prepayments and Balance Due. Use Layout Designer if you want to move the fields.
4. Select OK, then Print.

The rest of the layout is covered in how to [customize an invoice or sales order template](https://logistify.ai/guides/quickbooks-desktop/customize-invoice-template/).

## Step 3 (Enterprise): Apply the prepayment when you invoice

1. Open the sales order and select Create Invoice.
2. Choose to invoice the whole sales order or only selected items.
3. Save the invoice. When QuickBooks asks whether to apply prepayment credits, select Yes.
4. Select the prepayment credit, enter or change the amount to apply to this invoice, then select Done.

You can also select Apply Credits on an invoice to use a prepayment. For each prepayment credit you apply, QuickBooks creates two general journal entries: a positive amount to the liability account and a negative amount to Accounts Receivable. You'll find them under that customer or job in the Customer Center. For partial shipments, see [how to turn a sales order into an invoice](https://logistify.ai/guides/quickbooks-desktop/convert-sales-order-to-invoice/).

## Step 4 (Enterprise): Track open prepayments

- Reports > Customers & Receivables > Open Prepayments by Customer lists prepayments not yet applied to an invoice. To include fully applied ones, select Customize Report > Filters and set Prepayment Balance to Either.
- Reports > Sales > Open Sales Orders by Customer has a Prepayment Open Balance column. To add open estimates, filter Transaction Type to Multiple Transaction Types and select Estimate and Sales Order.
- Reports > Jobs, Time & Mileage > Estimates by Job also has a Prepayment Open Balance column.

## Without Prepayments: use an upfront deposit item

Intuit's upfront deposit article doesn't rely on Prepayments, so it's the route when Prepayments aren't available. The deposit is recorded on a sales receipt, not on the sales order.

### Set up the account and item once

1. Open the Chart of Accounts, right-click and select New.
2. Choose Other Current Liability as the type and give it a name, such as Upfront Deposit. Leave the opening balance at zero unless you already hold deposits you're bringing in.
3. Go to Lists > Item List, right-click and select New.
4. Choose Other Charge as the type for deposits on products, or Service for deposits on services.
5. Name the item, choose the liability account in Account, then select OK.

### Record the deposit

1. Go to Customers > Enter Sales Receipts and choose the customer in Customer:Job.
2. If Deposit To shows, choose the account the money goes into. If it doesn't, the money goes to Undeposited Funds for a later bank deposit.
3. Choose the payment method, and check the date and sale number.
4. In the Detail section, choose the upfront deposit item and enter the deposit amount.
5. Select Save and Close. QuickBooks records the deposit as a liability.

Money that lands in Undeposited Funds still needs a bank deposit. See how to [fix Undeposited Funds and deposits](https://logistify.ai/guides/quickbooks-desktop/fix-undeposited-funds-deposits/).

### Apply the deposit to the invoice

When the order ships, create the invoice as usual. Then use one of Intuit's two methods to apply the deposit.

- As a line on the invoice: on the next empty line, choose the upfront deposit item and enter the amount you're applying. This reduces the amount due. If the deposit covers the whole invoice, it's marked paid.
- As a credit: go to Customers > Create Credit Memos/Refunds, choose the customer, enter the upfront deposit item and amount, and save. In Available Credit, choose Apply to an invoice, pick the invoice and select Done.

The credit route works like any other credit. See [creating and applying credit memos](https://logistify.ai/guides/quickbooks-desktop/create-apply-credit-memos/).

## If the customer cancels

- Enterprise prepayment not yet deposited in the bank: Intuit says you can delete the prepayment along with the sales order, estimate or invoice it's applied to.
- Enterprise prepayment already deposited: create a credit memo and apply it to another invoice, or write the customer a check.
- Upfront deposit you keep, in full or in part: create an invoice with the items for the canceled order. Then add the upfront deposit item with the amount you're keeping as a negative number.
- Upfront deposit you refund: create a credit memo with the upfront deposit item, choose Give a refund, and select the bank account the deposit went into.

The refund steps are in [how to refund a customer](https://logistify.ai/guides/quickbooks-desktop/refund-customer/).

## Things that trip people up

- A prepayment can't be edited once it's applied to an invoice. Delete it, which also deletes its two journal entries, and enter a new one.
- Prepayments attach to a sales order or estimate, so create the order before you take the money.
- Turning on multicurrency switches Prepayments off, and multicurrency can't be turned off again.

If you deal in foreign currencies, read [how to set up multicurrency](https://logistify.ai/guides/quickbooks-desktop/multicurrency/) before you turn it on.

## Where QuickBooks Desktop leaves the work to you

- Someone has to decide how much deposit each order needs and tell the customer.
- Someone has to match each deposit that arrives to the right sales order and record it.
- With the upfront deposit route, the deposit sits on a sales receipt, so someone has to remember to apply it when invoicing.
- Open prepayments and deposits need a regular check so none sit unapplied.

## How Logistify helps

Logistify doesn't take deposits or record prepayments. The [Sales Order Service](https://logistify.ai/agents/sales-order/) enters customer orders that arrive by email, PDF, WhatsApp, SMS, voicemail or paper into QuickBooks Desktop as sales orders. A person reviews the exceptions. Your team then has the sales order ready to take the prepayment against.

## Frequently Asked Questions

### Can QuickBooks Desktop Premier take prepayments on sales orders?

Intuit documents Customer Prepayments for QuickBooks Desktop Enterprise 24.0 or later, and its article doesn't list Premier. In Premier, record the deposit on a sales receipt with an upfront deposit item tied to a current liability account.

### Why can't I turn on Prepayments in QuickBooks Enterprise?

Prepayments don't work with multicurrency, and Intuit says turning multicurrency on turns them off. Also check that you're on Enterprise 24.0 or later.

### Is a customer deposit income in QuickBooks Desktop?

Intuit treats upfront deposits as liabilities, not income, until you apply them to the invoice. Both routes use a current liability account.

### Can I edit a prepayment after it's applied to an invoice?

No. Delete it, which also removes its two journal entries, then enter a new one.

### How do I see which customers have paid a deposit?

In Enterprise, run Reports > Customers & Receivables > Open Prepayments by Customer. Open Sales Orders by Customer also has a Prepayment Open Balance column.

### How do I give a deposit back if the customer cancels?

For an upfront deposit, create a credit memo with the deposit item and choose Give a refund. For an Enterprise prepayment already deposited, apply a credit memo to another invoice or write the customer a check.

## Sources

- [Intuit: Receive customer prepayments in QuickBooks Desktop Enterprise](https://quickbooks.intuit.com/learn-support/en-us/help-article/sales-orders/receive-customer-prepayments-sales-orders-desktop/L2zjyXQAl_US_en_US)
- [Intuit: Manage upfront deposits or retainers in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/invoicing/manage-upfront-deposits-retainers/L7dNnFGBi_US_en_US)
- [Intuit: Create a sales order in QuickBooks Desktop](https://quickbooks.intuit.com/learn-support/en-us/help-article/sales-orders/create-sales-order/L6mKnrj8m_US_en_US)
- [Intuit: Set up and use Multicurrency](https://quickbooks.intuit.com/learn-support/en-us/help-article/multicurrency/set-use-multicurrency/L3AqaWJ9i_US_en_US)