Managing Customer Prepayments (Advances) in Zoho Books or Zoho Invoice

Home Watch IT prepayments and Zoho

Home Watch IT’s own Customer Prepayments feature now works with Zoho Books — see Introduction to Customer Prepayments. It does not work with Zoho Invoice; if you use Zoho Invoice, use one of the methods on this page.

Customer prepayments (also called advances or upfront deposits) occur when a client pays before an invoice is issued. The best way to manage these in Zoho Books or Zoho Invoice is to record them as prepayments so the funds are tracked accurately and can be applied to future invoices. Steps to Record a Customer Prepayment

1. Go to Contacts

   • In Zoho Books or Zoho Invoice, navigate to the Contacts module.

   • Locate and select the customer who made the prepayment.

2. Select Customer

   • Click the customer’s name to open their Contact Details page.

3. Record Payment

   • Click New Transaction > Customer Payment (or use the Invoice Payment link if visible).

4. Enter Details as a Prepayment

   • Select the Customer Advance tab.

   • Enter the amount, payment method, and any relevant notes (e.g., deposit reference).

   • Click Save.

5. Confirm as Credit

   • Zoho will prompt you to record this as an excess payment (credit).

   • Confirm, and the payment will be stored as a credit balance on the customer’s account.

Applying Prepayments to an Invoice

Once you create an invoice for the customer:

1. Open the newly created invoice.

2. Click Apply Credits (or similar option).

3. Select the recorded prepayment/credit and apply it toward the invoice amount.

For detailed instructions on applying credits, see Zoho’s guide: Apply Credits in Zoho Books

Best Practices

• Always record upfront funds as Customer Advances rather than manually adjusting invoice totals.

• Use clear notes when recording the payment (e.g., “Deposit for Project X”) to maintain audit clarity.

• Reconcile prepayments during bank reconciliation to ensure funds match your accounting records.

• Monitor credits regularly in the customer’s account to avoid leaving unapplied funds.

Prepaid visit packages with Retainer Invoices (Zoho Books)

If a client pays for a “bundle” of visits in advance (for example, $500 for 10 visits), Zoho Books’ Retainer Invoices can draw the money down automatically as Home Watch IT sends the visit invoices.

One-time setup

• Turn on retainers: in Zoho Books, go to Settings > Preferences > General and make sure Retainer Invoices is checked.
• Turn on auto-apply: go to Settings > Preferences > Invoices. In the Payments section, check “Automatically apply retainer amounts to invoices” (“Always” or “Only when the invoice is created”).

Issuing the package

• Create a Retainer Invoice: go to Retainer Invoices and create one for $500.
• Receive the payment: record the payment against the Retainer Invoice. The money is now held as a Retainer for that customer.

Automatic drawdown

When Home Watch IT sends a $50 visit invoice to Zoho, Zoho takes $50 from the customer’s Retainer Balance and applies it. The invoice shows as Paid.

Checking the balance: look at Retainer Balance at the top of the customer’s overview page in Zoho. When it reaches $0, the next visit invoice stays Unpaid, which tells you it is time to bill another package.