Hello again, MaryBethP.

I appreciate you providing the details on how your client wants to pay invoices. I’m here to ensure you’ll be able to track the customer’s prepayment, so you can efficiently manage your business.

At this time the option to automatically process a prepayment in QuickBooks Online is currently not available. Alternatively, you'll need to manually enter the payment.

To begin, create an account for posting the deposit you receive from your customer. Let me walk you through the steps.

Here's how:

1. Go to Accounting on the left panel, and select Chart of Accounts.
2. Choose New at the top.
3. In the Account Type drop-down, select Other Current Liabilities.
4. In the Detail Type drop-down, choose the type of account you want to create.
5. Enter Customer deposit in the Name field.
6. Fill in the field boxes.
7. Click on Save and Close.

Next, create the item you’ll use to invoice customers for the deposits. To add a Service item, please follow these steps:

1. Go to the Gear icon at the top, and choose Products and Services.
2. In the Products and Services window, select New.
3. Then choose Service.
4. In the Name field, enter Customer Deposit.
5. Fill in the field boxes.
6. Click on Save and Close.

After performing these steps, you can start with invoicing the customer for the initial payment. Just a heads up, the amount of the invoice is not income.

It will show as a liability on the balance sheet since the transaction is not yet complete to earn the revenue. By the time you’ll be creating the actual invoice, make sure to enter the Customer Deposit.

This allows the deposit to be shown deducted from the final invoice total where the customer can see they are receiving that credit.

By following the resolution steps, your customer's prepayment is already recorded without setting up a fake invoice.

I also recommend you share your thoughts directly to our Product Development Team to add this feature for future updates. Just click on the Gear icon and choose Feedback.

Don't hesitate to leave a comment below if you have additional questions about working in QBO. I'll be glad to lend a helping hand. Wishing you continued success.