Customer deposits, prepayments, and retainers

Record money received before you invoice as a customer deposit liability, apply it fully or partly to later invoices, and refund any unused balance.

Plans: Core and above
Availability: Rolling out in prelaunch
For: Owners, Bookkeepers
In KontoCore: Sales → Customer deposits

In plain English

Money paid up front isn’t income yet — you owe the customer work or goods. It sits as a liability until applied to an invoice.

What this does

A deposit records cash received and a Customer deposits (liability) balance, not revenue.

Apply it to eligible invoices for the same customer; partial application leaves the remainder unapplied. Revenue is recognized by the invoice, so it is never counted twice.

Before you start

Confirm a Customer deposits / unearned revenue liability account exists.

How to

Receive a deposit

1Sales → Customer deposits → New.
2Choose customer, amount, date, deposit account, method, and memo.
3Post; match the bank line when it imports.

Apply to an invoice

1Open the invoice and choose Apply deposit, or apply from the deposit.
2Enter the amount (up to the deposit balance and the invoice’s open balance).
3Save; any remainder stays available.

Refund unused balance

1Use Refund from the deposit (see Customer refunds).

Statuses and lifecycle

Status	Meaning
Unapplied	Fully available.
Partially applied	Some remains.
Applied	Fully used.
Refunded	Unused balance paid back.
Voided	Reversed.

Corrections, voids, and reversals

Unapply to free the deposit amount again; void a deposit only when nothing is applied or refunded.

Audit trail

Every create, post, void, and reversal records the user, time, and reason, and links to the source record.

Availability and provider notes

Built – unverified: this workflow exists in the prelaunch product but has not yet completed human certification. Review results before relying on them.
No external provider is required.

Permissions

Owners, administrators, and users with bookkeeping permission can create and post. View-only users can read but not change records.

What happens in your books

Receiving a $1,000 retainer, later applying $600 to an invoice:

Receive, then apply · illustrative

Account	Debit	Credit
Checking	1,000.00
Customer Deposits (liability)		1,000.00
Customer Deposits (liability)	600.00
Accounts Receivable		600.00

Common mistakes

Recording a retainer as income when received.
Receiving a payment on the invoice and also applying the deposit.

Troubleshooting

Deposit not offered on invoice

It belongs to another customer or has no remaining balance.

Customer refundsPay money back to a customer from available credit, an overpayment, or an unused deposit, choosing the paying account and method — never as an expense.Customer payments and depositsReceive customer payments against one or more invoices, handle partial and over-payments, group them into bank deposits, and match deposits to bank lines.Estimates and invoicesSend estimates, convert them to invoices, set terms and tax, and understand what an invoice does in your books.Customer statementsProduce a customer statement for a date range or as-of date showing opening balance, invoices, credits, payments, refunds, write-offs, and ending balance.

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Last reviewed October 6, 2026