# How to add and use DEPOSIT or PROGRESS PAYMENT lines on a sales order

KB157

### Overview

Sometimes it is necessary for customers to pay deposits or progress payments prior to you dispatching their goods or making their product. If the customer requires a tax invoice (as opposed to a pre-payment which is generally not taxable), then you can do this with a taxable deposit or progress payment line. You can add as many taxable deposit and progress payments lines as required.

To process these deposits or progress payments, you can use one of two methods.

- The dispatch and return method.
- The reversal and dispatch method.

### Dispatch and return method

1. Confirm that 'Accounts Receivable Setup > Preferences > Remove 0 quantity lines from Dispatches is Un-checked
2. Create an item code called (e.g.) “DEPOSIT” or “PROGRESS”
   - This will be a non-stock item code, with GST, and will allocate to an income account of your choice (either income, or a prepayments liability account)
   - Ensure that the Setup tab of the item has the Allow this item to be over-dispatched box ticked
3. On the sales order
   - Add the DEPOSIT or PROGRESS line
   - Add details of the deposit or progress payment to the item description
   - The quantity will be 0 (because once dispatched and returned, the net quantity of the deposit will be 0)
   - The value will be the amount of the deposit or progress payment
   - The total will be $0 because the quantity is zero - this is what you need
4. Dispatch and invoice the deposit or progress payment line
   - The quantity will usually be 1 if you are invoicing the full deposit or progress payment amount
   - Once invoiced, this will create a tax invoice of the value you require for the deposit or progress payment amount

#### When you dispatch the real goods

1. Create a dispatch
   - Because the deposit and progress payment lines has been "over dispatched", they should automatically appear with a negative - this is good
   - Add on all other items to be dispatched
2. Create the invoice
   - The deposit and progress payment lines, being negative, will produce a credit equal to the deposit and progress payments that have been.

### Reversal and dispatch method

1. Create an item code called (e.g.) “DEPOSIT” or “PROGRESS”
   - This will be a non-stock item code, with GST, and will allocate to an income account of your choice (either income, or a prepayments liability account)
2. Create an item code called (e.g.) "REVERSAL"
   - This will be a non-stock item code, with GST, and will allocate to an income account of your choice (either income, or a prepayments liability account)
3. Add the DEPOSIT or PROGRESS line.
   - Set the Quantity to the number of progress payments that the customer will be making (i.e. the number of invoices you will be creating).
   - Set the line's Total to the sum of the all the lines included in the progress payments.
   - Include details of the deposit or progress payment in the item description.
4. On the Sales order, add the REVERSAL line for the full negative amount of the Sales order.
   - Set the Quantity will be one.
   - Set the line's Total to the negative value of the deposit or progress line you have added (they should sum to zero).
   - Include details of the deposit or progress payment in the item description.

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Last edit: 22/07/2026